Nov. 13 2002
Washington, D.C. — Congress should enact legislation introduced today by U.S. Reps. Martin Meehan (D-MA) and James Hansen (R-UT) to curtail the alarming growth of tobacco product sales over the Internet that make low-cost cigarettes readily available to kids and evade state taxes. The vast majority of Internet tobacco retailers fail to take effective steps to ensure they are not selling to kids, and many of them are not currently complying with applicable tax laws. We support the Meehan-Hansen legislation because it requires Internet tobacco retailers to obey the law and protects our kids.
To stop Internet sales of cigarettes to kids, the Meehan-Hansen legislation, The Tobacco Free Internet for Kids Act of 2002, would require Internet retailers to verify the age of their customers using government identification checked against related databases. The bill also requires signature and age-verification upon delivery.
Passage of the Meehan-Hansen bill would also, for the very first time, provide state governments with an effective tool for collecting state taxes on Internet tobacco product sales to their residents. State revenue losses from Internet cigarette sales are a growing concern among those states that have high cigarette taxes, have just passed cigarette tax increases or are considering cigarette tax increases. The Meehan-Hansen legislation requires Internet vendors of tobacco products to register with the states where they sell their products and comply with all related state laws regarding state tobacco tax collection and reporting. It also gives state officials the right to seek injunctive and equitable relief in federal courts to enforce Internet sellers' compliance with both the tax collection and youth access provisions of the bill.
Up from only a handful in the mid to late 1990's, there are currently more than 200 websites in the U.S. that sell tobacco products, and many more based overseas that sell to U.S. residents. Sales of tobacco products on the Internet are growing rapidly and will account for 14 percent of the total U.S. market by 2005, according to a recent Prudential Securities report. Many Internet vendors are not complying with laws governing tobacco sales to minors or state cigarette tax collection laws. An upcoming study in the American Journal of Public Health found that one in five cigarette-selling websites do not even say that sales to minors are prohibited and more than half require only that the buyer say they are of legal age, thus giving children easy access to on-line tobacco purchases. In addition, the U.S. General Accounting Office recently reported that three-quarters of all Internet tobacco sellers explicitly say that they will not report cigarette sales to tax collection officials, thus violating Federal law. A study by Forrester Research Inc., a private research firm, estimates that states are currently losing as much as $200 million annually in uncollected tobacco taxes through Internet sales.
Every day in this country, more than 4,000 kids try cigarettes for the first time. More than 2,000 become regular smokers, one-third of whom will die prematurely as a result. Putting tough restrictions on cigarette sales over the Internet is a critical part of protecting our kids. Congress should take swift, strong and effective action to do so. We look forward to working to make passage of this legislation a priority in the 108th Congress.