There are questions being raised as to the state’s ability to collect revenues from the most recent cigarette tax hike, and they are not just coming from opposition legislators in Albany.
“It’s not really doing what it’s supposed to do,” said Joe Carney, owner of a Carney’s Corners store in Herkimer and Little Falls, in a phone interview. “A lot of people don’t buy them at the stores anymore.”
He explained that most of the feedback he gets involves people admitting they buy cigarettes on the Internet or through other semi-legal avenues.
With these practices having already impacted Carney’s business, he estimates that the new tax will decrease cigarette sales by another quarter to third at both stores.
The New York’s Division of the Budget and the Department of Taxation and Finance are providing detailed statistics to justify the hike.         
In 2006-07 New York state collected $985 million in cigarette and tobacco taxes compared to an estimated $973 million in 2007-08, a 1.2 percent decrease, according to their economic revenue outlook.
Projections for the 2008-09 revenues are set at $1.05 billion, an 8.1 percent increase, according to the outlook.
 This significant turn around can be attributed to the total excise tax of $2.75, which brings the cost of an average pack of cigarettes to $6 in Upstate.
According to a release by the State of New York Health Department this produces more than $5 billion in health care savings over the long term and raises about $265 million this year in additional state revenue.   
“I just don’t think this is going to be as effective as everybody hopes,” said Assemblyman Marc Butler (R-Newport) in a phone interview.
“They make these projections on revenue on current use ...The math is pretty simple,” added Butler, explaining that factors such as non-taxed reservation sales, smuggling, and the predicted drop in smokers have not been taken into account. “It forces people to get cigarettes from alternative sources and escape from paying taxes all together.” 
Tom Bergin, taxation and finance spokesman, said the projections did look into the substitution of other products, such as loose tobacco, and tax avoidance.
“We estimate a 28-percent drop off in tax-paid packs,” said Bergin in a phone interview. “There will be fewer tax-paid packs sold.”
He further expounded that the tax department is “pretty rigorous” in it’s enforcement efforts with district attorneys, the FBI, and local police departments.
“We understand that when taxes go up people are going to be trying to avoid paying,” said Bergin, adding that each year hundreds of individuals are arrested for smuggling and hundreds of thousands of cartons of cigarettes are seized.
Roughly 70 percent of the excise tax on cigarettes in the state goes to a health care initiatives pool, with the remaining 30 percent going to the budget’s general fund, according to Bergin.
Carney said he can’t blame the state for the tax hike. “They want their cut.” But, he added, “It does punish the lowest income people.”
Since his stores are diverse and don’t rely on just cigarette sales, Carney said he’s not to worried, “I can roll with the punches.”