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Queens Chronicle

Bill to tackle illegal cigarette market

Avella: City exacerbating problem

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Posted: Thursday, August 1, 2013 10:30 am | Updated: 10:40 am, Thu Aug 8, 2013.

State Sen. Tony Avella (D-Bayside) has introduced legislation that would establish a task force to battle the black market on cheap cigarettes which he says is hurting store owners, and the city is partially responsible for creating the problem..

Joined by the leadership of the Small Business Congress and small business owners at a press conference in Downtown Flushing on Friday, Avella said the cigarette black market hurts legitimate businesses and some of the money goes to terrorist groups like Hezbollah and Hamas.

“This criminal activity creates unbalanced and unfair competition for law-abiding stores that do pay taxes,” Avella said.

The task force would consist of nine members, including the New York State attorney general, and would examine and investigate issues related to the sale and distribution in New York State of tobacco products for which required tax has not been paid, including unlawfully manufactured cigarettes, those smuggled in from low-tax jurisdictions, and tobacco products from convenience stores, cargo ships and planes and truck hijacking. The task force will be able to hold public hearings and propose legislation.

The bill, which does not have an Assembly version, is supported by the Small Business Congress, whose president, Sung Soo Kim, said small businesses have lost hundreds of millions in revenue in the last decade because of the illegal market that has developed due to the higher cost of cigarettes in the city.

“We need to stop the black market sales so that retailers who sell cigarettes are not continually victimized,” Kim said. “Since 2003, we have lost around $250 million in revenue each and every year — and that’s in New York City alone.”

Avella said 69 percent of cigarettes sold in New York State are illegal and said the city shares partial blame for fostering the problem by raising taxes on cigarettes without further enforcement against illegally sold cigarettes.

“That’s a huge black market,” he said. “The Council doesn’t go far enough and doesn’t go after the black market, which is the big problem.”

Kim said his group does not oppose city regulations on cigarettes, including higher taxes and new proposals to raise the minimum age to buy cigarettes to 21, but that the city also needs to go after the black market those laws create.

“We’re not against that,” Kim said. “That’s lawbreaking. But what we are saying is that they have to regulate the black market first, then they can apply those regulations on us. The city is putting the cart before the horse.”

He pointed out that the administration does enforce other, less serious, regulations.

“I have one store owner who received a $1,300 fine because a sign he posted was not conspicuous,” Kim said. “That’s crazy.”

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