NY Retailers Challenge Tobacco Fee Hike

     MANHATTAN (CN) – Convenience stores and gas stations across the state say a recently enacted increase in tobacco permit fees, to pay for health care, is unconstitutional. The retailers say their flat annual fee of $100 has been jacked up in some cases to $5,000, and is not based on how much tobacco they sell, but on gross sales.

     The retailers say the state unfairly increased the cost of their tobacco permits by 900 percent to 4,900 percent.
     Retailers previously paid a $100 flat fee for the permits, but the amended tax code approved in April changed the fee to a sliding scale based on gross sales of all products.
     Stores grossing less than $1 million have to pay $1,000 for their tobacco permit; those grossing between $1 million and $10 million pay $2,500; and those grossing more than $10 million must pay $5,000.
     The retailers say that because the fee “is not calculated based on the amount of tobacco products sold,” it is not a permit at all, but a tax by another name.
     “New York has no plausible rational basis for calculating a registration fee for the sale of tobacco products based upon the gross sales of completely unrelated products, such as gasoline and diesel fuel,” the plaintiffs say.
     They also object that instead of using the money for “monitoring the registrant tobacco retailers,” the state will use some of it for the Health Care Improvement Act.
     They claim the new fees are arbitrary and discriminatory, and violate their rights to equal protection.
     Plaintiffs include the United 7-Eleven Franchise Owners of Long Island and New York, Long Island Gasoline Retailers Association, New York State Association of Service Stations and Repair Shops, New York Association of Convenience Stores, and Service Station Dealers of Greater New York Inc.
     Represented in New York County Court by Andrew Curto with Forchelli, Curto & Deegan, they seek declaratory judgment and relief.

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