April 10, 2009 - A provision to suppress the sale of tax-free cigarettes sold on Florida's Indian reservations was tacked onto the Senate bill to raise the cigarette tax a $1.00 pack Tuesday night, April 7, 209. State senators want tribe's smokes labeled "Indian cigarettes'' and any non-Indian caught with them forced to pay a $1,000 fine and face misdemeanor charges. The Senate bill also requires that state regulators spend $50,000 on a public awareness campaign alerting smokers that buying tax-free cigarettes from the tribes is illegal.
Lawmakers fear that when the tax hike takes effect, buyers will flood Indian reservations to get the lower-priced cigarettes and undercut state tax collections.
The state now loses about $8.6 million from the sales of 26 million packs of cigarettes sold each year at smoke shops on the Seminole and Miccosukee reservations, according to the Florida Department of Business and Professional Regulation. Because the tribes are sovereign nations, the state can't prevent them from selling cigarettes and it can't force tribal stores to collect the state tax.
If lawmakers approve the plan to raise the cigarette tax from 34 cents per pack to $1.34 per pack, and impose a $1 per ounce tax on cigars and smokeless tobacco, estimates are that the state will raise about $1 billion. But that does not include the lost revenue from tobacco purchases on tribal land, purchases made on the Internet and from other sources. That amount could soar to more than $68 million. State economists said Wednesday that the penalties on any nontribal purchasers of the tax-free cigarettes would likely reduce the tax loss by a third or more, because the measure will be hard to enforce.
Reference: Florida Senate wants to restrict tax-free tobacco sales at Indian reservations by Mary Ellen Klas, St. Petersburg Times/Herald Tallahassee Bureau, 4/9/2009.
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