ALBANY – New Yorkers can earn cash rewards for ratting out bodegas, groceries and individuals selling bootlegged cigarettes if a bill supported by Mayor Bloomberg wins approval.
Under the bill, the city would give a “suitable” reward to anyone who provides information that leads to the detection of violations of the cigarette tax.
Under the legislation, a person “generally” could receive up to 15 percent of the owed taxes that are eventually collected, meaning someone responsible for a bust leading to $1 million in tax collections could reap a $150,000 reward.
City and state officials believe more people are turning to bootlegged cigarettes after the city and state dramatically increased their cigarette taxes two years ago.
They see the new law as “a valuable enforcement tool.”
“Revenue, revenue, revenue,” said the Senate bill’s sponsor, Frank Padavan (R-Queens), on the intent of the bill.
“There’s a tremendous amount of revenue from this underground economy, and cigarettes are a big part of it.”
The bill passed the Republican-led state Senate last year but died in the Assembly, where it is sponsored by Assemblyman Jeff Klein (D-Bronx).
It has been reintroduced in both houses this year and Klein said he thinks chances for approval in the Democratic-controlled Assembly are better this year.
“The mayor urges the earliest possible favorable consideration of this proposal by the Legislature,” according to a bill sponsor memo.
Klein – who estimated smuggling is costing as much as $80 million annually in lost tax revenue – says the bill would give more incentive to wholesalers to inform on stores that suddenly drop their orders, a possible indication they are getting their cigarettes from another source.
“If a store buys less from the wholesaler, the wholesaler knows that something is up and will respond because they will lose money,” Klein said.
The bill, he added, will raise revenue for the city and state and could keep lower-priced cigarettes out of the hands of children.
“It’s something we’re interested in doing,” Klein said.
A Bloomberg spokesman did not have an immediate comment.
The city in July 2002 raised its cigarette excise tax to $1.50 a pack, up from 8 cents. The state in April of that year also dramatically raised its excise tax to $1.50, up from $1.11.
The increases pushed the price of cigarettes in the city to more than $7.50 a pack.
Smuggling was believed to have increased dramatically since then, with bootleggers making hundreds of thousands of dollars on every truckload of cigarettes brought illegally into the city.
With the increased smuggling have come beefed-up enforcement efforts from both the city and state.
During the first six months of last year, cops from the NYPD’s Cigarette Interdiction Group arrested 44 bootleggers and confiscated 12,018 cartons of untaxed cigarettes.
REWARD
The state and city want to crack down on untaxed cigarette sales:
Tax revenue lost : $80 million
How the reward system would work:
1. Informer tells city of possible cigarette tax violationj.
2. Violator is investigated and convicted.
3.Penalties are assessed.
4. Back taxes and fees are collected.
5. Informer receives reward – up to 15 percent of what city recovers.