OK Governor Says Tobacco Tax Enforcement Methods Outdated

Article excerpt

Among an array of solutions proposed Monday to solve the state's problem with tobacco tax collections, Gov. Brad Henry's office is following the U.S. Supreme Court's lead in targeting wholesalers.

One thing we learned in recent months is that our enforcement tools are outdated and insufficient to adequately regulate today's tobacco industry in Oklahoma, said Henry.

When the Oklahoma Legislature reconvenes in February, Henry said he will ask lawmakers to approve a legislative package designed to provide state government with better enforcement mechanisms.

The tobacco tax structure voters approved in November, which went into effect Jan. 1, has failed to yield the tax collections Henry's administration had projected. Tony Mastin, director of tax policy and the research division of the Tax Commission, said the state has been collecting about $18 million per month from the tax, which is $4 million below the $22 million monthly average that was projected.

State Treasurer Scott Meacham has blamed much of the shortfall on tribal smoke shops that are not collecting their share of the tax. Some tribal smoke shops throughout the state have been found to be improperly selling cigarettes taxed at a special 6-cent-per-pack rate reserved for shops at Oklahoma's borders that have to compete with retailers in other states.

Republican lawmakers have clamored over the problems with new tobacco tax structure, claiming that non-tribal tobacco retailers are being driven out of business by tribal shops' improper use of the 6-cent tax stamp. Non-tribal retailers have to sell cigarettes stamped at $1.03 per pack. Testimony provided during a series of hearings on the tobacco tax held by Rep. Kevin Calvey, R-Del City, chairman of the House Revenue and Taxation Committee revealed that the state is severely limited in its ability to enforce its compacts with the tribes. …