Opinion ID: 8407619
Heading Depth: 4
Heading Rank: 2

Heading: Sale of Untaxed Cigarettes

Text: The State also argued to the district court that one of the Statute’s purposes is to require purchasers, by virtue of the face-to-face transaction, to pay the state excise tax. The State claims that the high excise tax decreases demand for cigarettes and thereby protects the health of New York consumers. The district court credited the State’s argument, finding that the evidence “demonstrated that an increase in the price of cigarettes will lead to a decrease in the demand for cigarettes.” Id. at . The court concluded, however, that the State failed to show that the Statute would advance this “worthy goal” or that no less discriminatory means were available. Id. at . Citing the loopholes discussed above, the court concluded that the State did not satisfy its “burden of demonstrating that [the Statute] will effect the benefit of reducing smoking through the maintenance of high cigarette prices” because “Indian retailers can and will continue to sell cigarettes by direct sales to New York consumers,” and because the Statute “cannot be enforced against the U.S. Postal Service.” Id. at . The court also found that the Statute failed strict scrutiny because the State did not demonstrate a lack of less discriminatory means for collecting the cigarette excise tax. Id. The court explained that the New York State Department of Taxation and Finance “has chosen not to make any effort to collect taxes on cigarettes sold from out-of-state to New York consumers by telephone, mail and Internet.” Id. As an example of available alternative means for collecting cigarette excise taxes, the court described the scheme adopted in California for the collection of taxes and concluded that “[t]he evidence shows that there are other nondiscriminatory alternatives to a complete ban on the direct sale of cigarettes.” Id. at . The court then declared that the Statute fails strict scrutiny and permanently enjoined its enforcement. Id.