The city's Law Department has filed two more lawsuits against stores that exploit a perceived loophole in the city's obscene cigarette tax law. You'll recall that New York Smokes, a retail tobacco outlet on Staten Island, was making bank selling customers loose tobacco, which is taxed at a far lower rate than cigarettes. Customers would then roll their own smokes in the store using cigarette stuffing machines, walking out with a pack for about $6—far less than the average $13 price. But then the city cracked down on that enterprise, and now the guv'ment is going after two more shops.
The Law Department announced it has filed lawsuits against City Smokes, on Coney Island Avenue in Brooklyn, and Victory Smoke Shop, on Victory Boulevard in Staten Island. According to the Law Department, both businesses evade cigarette taxes by providing customers with loose tobacco, tubes of cigarette paper and access to machinery that instantly produces finished cigarettes. The city charges that these businesses, along with their owners and employees, violate the Federal Contraband Cigarette Trafficking Act and the state Cigarette Marketing Standards Act by selling cigarettes on which the required taxes have not been paid.
Michael McGowan, the owner of Victory Tobacco, tells us he plans to fight the city. "We're not doing anything illegal," insists McGowan. "Why did they give us a license if we're illegal? We just rent machines so people can make their own cigarettes. We do not manufacture cigarettes. And the excise taxes are paid by the supplier of the tobacco, Fresh Choice tobacco."
But McGowan's odds of winning a battle against City Hall seem slim: In December the city won a court-ordered consent decree in December that shut down another roll-your-own operation on Staten Island, and New York Smokes entered into a settlement with the city in which it has agreed to shut down.
