In spite of recent stronger penalties, traffickers are still smuggling Virginia’s low-tax cigarettes to other states—especially to New York City, where demand for the Commonwealth’s cigarettes is soaring due to the city’s high excise taxes.
Some estimates suggest that 21 percent of Virginia cigarettes end up in other states, where profits are so high that many criminals would rather sell tobacco than heroin. But the State Crime Commission is recommending a different tactic to deter the traffickers.
Fake retailers without stores have avoided wholesale cigarette taxes by using the Virginia resale certificate, which obligates tax payments when the products are resold on the retail level. Senator Janet Howell praised the proposal to require retailers to be licensed in order to buy and sell cigarettes. She said federal officials won’t help.
“To suggest that we wait for them to do something is to just sort of offer an open invitation to terrorists and organized crime to take advantage of our low tax rate.”
Delegate Rob Bell said the plan places a burden on honest retailers.
“We’re about to impact 4500, 8,000, 12,000 or maybe 15,000 stores—many of which are ‘mom and pops.’”
The panel also proposed lowering the felony threshold level from 500 to 200 cartons.
Under the Crime Commission’s plan, the Department of Alcoholic Beverage Control would manage permitting and enforcement for retailers and wholesale distributors. Any revisions of current law would still need General Assembly approval.
