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Tobacco tax earns less than estimated
Lawmakers get update on numbers
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FarkPIERRE - 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.
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