Published July 1, 2008 | July 2008 issue
Looking for every penny of revenue to cover a yawning state budget deficit, the Wisconsin Department of Revenue sent more than 1,000 letters to in-state smokers who reportedly avoided paying cigarette taxes by buying their puffs from Internet vendors.
The state recently upped its cigarette tax by $1, to $1.77 per pack, second-highest in the country. The state expects to raise about $500 million in new revenue from the tax, despite some buying shifts, like border crossings to states with lower cigarette taxes.
Many buyers look to Internet vendors to escape the tax altogether. So the state got the names of buyers from online vendors after notifying about 75 of them that they were responsible for ensuring such tax payments. Buyers who fail to pay the state tax also face the possibility of a $25 per-carton fine.
Wisconsin made a similar attempt to recoup Internet cigarette taxes in 2005, but it failed politically in part because there was no state deficit.
—Ronald A. Wirtz