Senator Dale Volker Takes Up Fight Against Cigarette Smuggling

William T. Stachowski

January 30, 2007

(ALBANY, N.Y.) Senator Dale M. Volker (R-C-I, Depew) introduced legislation that will give New York a powerful weapon in its fight against cigarette smuggling. The bill mandates the use of new counterfeit-resistant tax stamps, the licensure of all cigarette manufacturers, and the creation of a new "Cigarette Enforcement and Anti-Smuggling Fund."

This legislation will give enforcement officers the tools they need to stop an illegal cigarette trade that is funding organized crime and terrorist operations. The traffic of illegal cigarettes costs New York hundreds of millions in lost tax revenue. The bill will not only help the state recapture lost cigarette tax revenue, but it will recapture sales tax revenue which benefits local governments throughout the state. In addition to the impact on state finances, cigarette smuggling in New York has compromised state and national security. ATF investigations have determined that a terror cell illegally purchased cigarettes in Western New York and resold them in New York and Michigan at a premium. These investigations illustrated that the profits were used to finance international operations by the terror group Hezbollah.

"The cost of cigarette smuggling to our state in lost revenue is substantial, but the potential impact to the health and safety of New Yorkers is incalculable," said Senator Dale Volker. "Today, we start to fight back against smugglers, gangs, organized crime and terrorists with new modern technology. The days of using New York as a criminal piggybank are over."

The legislation has several components designed to tighten control over the tobacco supply chain in New York and enhance the state’s ability to prevent illegal cigarette trafficking and interstate smuggling. The new legislation mandates:

1. The licensure of cigarette manufacturers in New York. This will give the state greater oversight and authority over the source of cigarettes in New York.

2. The use of counterfeit-resistant tax stamps encrypted with multiple layers of security. Smugglers often use counterfeit tax stamps to elude capture and disguise illegal cigarettes. California is currently the only state using encrypted stamps. In the first 22 months of operation, the state recaptured $75 million in incremental tax revenue while enhancing investigation and preventing smuggling.

3. The creation of a new "cigarette enforcement and anti-smuggling fund" that will be accessed by the Department of Taxation and the Office of Homeland Security to improve and enhance enforcement and security in the state.

Assemblyman Dennis Gabryszak will carry the bill in the Assembly. Garbyszak’s predecessor Paul Tokasz was a key supporter of this initiative.

Senator Volker has received broad early support from several prominent healthcare advocacy groups and is communicating with officials and experts in the law enforcement and homeland security areas to gain their insight and support.