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18TOBACCOOUTLETBUSINESSMAYJUNE2010TheImpactofthePACTActByThomasA.BriantExecutiveDirectorNationalAssociationofTobaccoOutletsItx19sbeenalongtimeincomingbutonMarch31PresidentObamasignedintolawthePreventAllCigaretteTrax1efckingActorPACTActwhichwillseverelycurtailthesaleox1ecigarettesandsmokelesstobaccoproductsovertheInternet.Thisisamajorvictoryx1eortheindustryandthestatesbecausethelawwhichgoesintoex1ex1eectonJuly12010includesthex1eollowingprovisionsx9Retailersx9thatx9sellx9cigarettesx9andx9smokelessx9tobaccox9productsovertheInternetmustcollectstatecigarettetaxessmokelesstobaccotaxesandsalestaxesandpaythosetaxestothestateswherethecustomerwhoispurchasingthetobaccoproductsresides.x9Internetx9retailersx9mustx9verifyx9thex9agex9ofx9thex9individualx9purchasingcigarettesandsmokelesstobaccoproductstopreventunderageyouthx1erombuyingtheseproducts.x9Thex9U.S.x9Postalx9Servicex9isx9prohibitedx9fromx9deliveringx9cigarettesx9andx9smokelessx9tobaccox9productsx9throughx9thex9U.S.x9Mailtoconsumers.Theseprovisionscloseanumberox1eloopholesincurrentx1eederallawregulatingInternetandmailordersalesox1ecigarettesandsmokelesstobaccoproducts.CurrentlyInternetsellerstypicallyselluntaxedorlow-taxedcigarettesandsmokelesstobaccoproductstoconsumersinhigher-taxjurisdictionswithoutpayingthetaxesowedtothestates.Thisresultsinstateslosingsubstantialexcisetaxandsalestaxrevenueopeningthedoorx1eorunderageyouthpurchasesox1etobaccoproductsandreducingsalesox1etobaccoproductsbylaw-abidingretailers.LOCALBUYINGWithInternetsellersnolongerabletosellcartonsox1ecigarettesorsmokelesstobaccoproductsatalargepriceadvantageoverlegitimatebrickandmortarretailersconsumerswillreturntobuyingtheirtobaccoproductsx1eromlocalstores.MoreoverthePACTActvirtuallyguaranteesthisreturnx9tox9buyingx9fromx9localx9retailersx9becausex9thex9U.S.x9Postalx9Servicex9willx9bex9prohibitedx9fromx9deliveringx9tobaccox9products.x9Withmailingcigarettesandsmokelesstobaccoproductsbeingx9illegalx9andx9otherx9companiesx9includingx9UPSx9FedExx9andx9DHLnolongerdeliveringtobaccoproductstocustomersInternetsellerswillbeunabletotransactbusinessasusual.TAXWINDFALLThismeansthateverystatewillbethebenefciaryox1eataxwindx1ealleitherx1eromstateexcisetaxesandsalestaxesbeingremittedbyInternetsellersorx1eromconsumerschangingtheirbuyinghabitsandpurchasingtheirtobaccoproductsatlocalretailx9stores.x9Accordingx9tox9U.S.x9Senatorx9Herbx9Kohlx9D-Wisx9thex9chiex1esponsorox1ethePACTActInternettobaccosalesalonecoststategovernments1.4billionannuallyintobaccoexcisetaxesandsalestaxes.Theamountox1ethetaxwindx1eallwillvarybystatewiththosestateswithhighcigaretteandOTPtaxratesmostlikelyseeingthelargesttaxwindx1eallbecauseresidentswouldhavehadagreatertendencytoavoidpayingexcessivetaxratesbypurchasingtobaccoproductsonline.NATOx19SSTRATEGYSeizingx9onx9thisx9newlyx9enactedx9lawx9NATOx9hasx9begunx9tox9educatestatelawmakersaboutthetaxwindx1eallinthosestateswherelegislationispendingtoincreasecigaretteandOTPtaxes.Withthewindx1eallavirtualcertaintyx1eoranygivenstatelawmakersmaybeabletoavoidpassingx1eurthercigaretteandOTPx9taxx9increasesx9orx9reducex9thex9sizex9ofx9thex9increasex9tox9resolvex9budgetdefcits.ThisstrategyhasalreadybeenundertakenbyNATOx9inx9Minnesotax9andx9Newx9Hampshire.GROUPEFFORTPassingx9thex9PACTx9Actx9intox9lawx9wasx9ax9groupx9effortx9andx9NATOx9wasx9ax9memberx9ofx9thex9Coalitionx9tox9Stopx9Contrabandx9Tobaccox9acoalitionox1etradeassociationsbusinessesandindividualswhichlobbiedCongresstopassthelegislation.ThiscoalitionincludedtheAmericanWholesaleMarketersAssociationAWMAx9thex9Nationalx9Associationx9ofx9Conveniencex9Storesx9NACSx9andx9thex9Societyx9ofx9Independentx9Gasolinex9Marketersx9ofx9Americax9SIGMA.x9ThomasBrianttheexecutivedirectorofNATOcanbecontactedat1-866-869-8888orviae-mailatinfonatocentral.org.TOBTRADETALKBYTHOMASBRIANT