Online cigarette sales: "It's just like the Wild West"
According to Forrester Research, the Wall Street Journal reports (subscription required), online cigarette sales will be over $1 billion this year and over $5 billion by 2005 (or 14% of total sales). At that point, states will be losing $1.4 billion a year in taxes. For example, cigarette sales in New York City have dropped dramatically as new sales taxes have boosted prices to more than $7 per pack.
At the same time in Goldsboro, sales surged from about $15,000 a month to $25,000 at nccigarettes.com, said owner Scott Herring, who runs the year-and-a-half-old Internet tobacco shop from his house.
The reason is simple: He can pay North Carolina's nearly negligible five-cent-a-pack tax and still sell cigarettes to New Yorkers for less than half of what they pay at their corner store.
...The federal Jenkins Act requires online cigarette retailers to furnish purchase records to customers' home states so officials can collect state and local taxes. But the penalty is a misdemeanor and the law isn't enforced, say antismoking advocates.
"It's just like the Wild West," said Eric Lindblom of the Campaign for Tobacco-Free Kids, a Washington advocacy group. "There's no marshal in town and these Web sites are flaunting the fact that they're ignoring the law."