LONG ISLAND, N.Y. ? A federal judge has found two tobacco wholesalers guilty of illegally selling untaxed cigarettes to Indian retailers in Long Island, the New York Times reports. The retailers then sold the untaxed cigarettes in the city for rock-bottom prices.
The wholesalers could have to pay as much as $15 million in penalties. The decision marks a victory for New York, which has been trying for years to receive cigarette taxes on smokes sold by Indian-owned establishments to non-Indians.
The city?s argument in part is that less expensive cigarettes constitutes a public health concern because taxes can be a smoking deterrent. Cigarettes are taxed at $4.35 per pack in New York.
The wholesalers violated federal law by selling huge amounts of cigarettes and not paying state or local taxes. Wholesalers can avoid paying taxes if selling cigarettes to Indian retailers, who then sell the goods only to Native American customers.
?The vast majority, if not all, of the unstamped cigarettes the defendants sold to reservation retailers were resold to and consumed by non-Native Americans,? wrote Judge Carol B. Amon of the Eastern District of New York in her decision.