PIERRE - The
increased tax on cigarettes produced $11.1 million for the state in
the past two months, about $300,000 less than state revenue
officials had estimated.
The state's voters
last November raised the tax by $1 a pack, to $1.53 effective on
Jan. 1.
Total revenue from
the tobacco tax was $46.6 million in the fiscal year that ended
June 30. That number doesn't compare directly to whatever this
year's total might be because the higher tax was collected for half
of the year.
Revenue officials
say it will take a longer look at revenue performance to get a
better picture of how the tax increase impacted cigarette sales,
but they told legislators last month that sales of cigarette tax
stamps was off 25 percent since the first of the year.
State Revenue
Secretary Paul Kinsman said he's reviewing possible legislation
that would reduce the amount of bootlegged cigarettes brought into
South Dakota.
It's illegal to
have cigarettes that do not carry the state tax stamp.
South Dakota
lawmakers killed a bill last year that would have provided stiff
penalties for bootlegging.
"We're taking a
look at that, and I think some legislation that would strengthen
the department's hand might be beneficial," Kinsman said. "It's a
double-edged sword. Do you really want the department to
essentially be stopping cross-border traffic - South Dakota
residents and folks that are traveling through the state - to check
for unstamped cigarettes?
"One, it would be a
huge undertaking and, two, there would be significant political
fallout if the department were to become the cigarette police for
the rest of the nation. I don't know that that's something you want
the department to be involved in."
A master legal
settlement between major tobacco companies and most of the states,
including South Dakota, requires diligent enforcement of laws in
order for states to continue to receive annual payments. Every pack
of cigarettes sold in the state must have a tax stamp or the state
may seize and destroy the product.
Kinsman said he has
signed only three such destruction orders in the past eight or nine
months. Those tended to involve a carton of unstamped cigarettes at
a time, rather than truckloads, he said.
