WASHINGTON, D.C. -- In response to the U.S. Senate Finance Committee's meeting Tuesday on tobacco tax evasion, NACS, the Association for Convenience & Fuel Retailing, issued a statement to provide background information on the issue.
The statement, entitled "Tobacco: Taxes Owed, Avoided and Evaded" was submitted by Lyle Beckwith, senior vice president of government relations at NACS. The letter details how the illicit sale of tobacco products puts convenience store retailers at a severe competitive disadvantage.
The primary channels through which illegal sales occur include:
- Native American tribes and tribal leaders who evade state taxes on sales of tobacco.
- Non-face-to-face transactions, such as Internet sales.
- Tobacco manufacturers who evade recent tax increases for cigarettes, roll-your-own (RYO) tobacco and little cigars by mislabeling RYO tobacco as "pipe tobacco."
- Individuals who transport cigarettes from low-tax states to high-tax states for sale on the black market at a substantial discount compared to retail prices.
NACS went on to acknowledge Congress' steps to address some of these problems, such as the Prevent All Cigarette Trafficking (PACT) Act, the MAP-21 highway reauthorization bill passed in 2012, and the Family Smoking Prevention and Tobacco Control Act, which gave the Food and Drug Administration's Center for Tobacco Products the power to enforce other laws, such as prohibitions against underage sales by Internet sellers.
However, greater enforcement of these laws is needed to stem illicit sales and tax evasion, according to NACS.
“Tobacco tax evasion continues to harm both legitimate retailers and the entities to which the taxes are due,” said Beckwith. “NACS appreciates the Senate Finance Committee’s attention to this issue.”
NACS' full statement is available here.
NACS is an international trade association composed of more than 2,200 retail member companies and more than 1,600 supplier companies doing business in nearly 50 countries.