EDITORIAL: Tobacco Tools: Henry Asks for More Muscle

By The Daily Oklahoman, The Daily Oklahoman

Dec. 14–After months of lower-than-expected revenue, and apparently fruitless discussions with tribal officials, Gov. Brad Henry is turning to the Legislature for help with Oklahoma’s new tobacco tax.

Henry wants the state to crack down on tobacco wholesalers and on Indian smoke shops that have been selling cigarettes at a tax rate lower than what’s allowed by their compacts with the state. This is something legislators need to tackle early in the 2006 session, as this push by the governor is long overdue.

It’s been clear since shortly after the law went into effect on Jan. 1 that the tax wasn’t working as advertised. Revenues have yet to reach projections for any month, and nontribal retailers have seen their market share dwindle significantly.

In a disclosure last month that was as disappointing as it was striking, a tribal official acknowledged that her tribe knew some of its retailers were buying cigarettes with the lowest tax stamp (6 cents per pack) and reselling them at locations where a much higher tax rate is required, but that it didn’t plan to stop the practice. “We could stop it,” she said. But there’s little incentive, given the state’s lack of enforcement tools.

Henry wants to make sure wholesalers pay tobacco taxes to the state and that they sell for wholesale only to licensed wholesalers. He wants to make tax stamp records of wholesalers and smoke shops subject to inspection, limit the number of 6-cent stamps and increase fines for entities that don’t follow the law.

Critics of the governor have blamed shoddy compacts for this mess. They’re part of the problem, as is the hodgepodge of tribal tax stamps in circulation. It’s also true some wholesalers and smoke shops are skirting the rules, and the state needs the muscle to stop it. Henry’s request for enforcement help is one that merits serious attention from both sides of the aisle.

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