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The Tobacco Toll
Find out what
tobacco has done
to your state!
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Updated: 10.21.05
 ncreased sales of tobacco products over the Internet pose a major challenge to public health efforts to reduce smoking and other tobacco use. By failing to do adequate age verification, the sharply growing number of websites selling tobacco products make it easier and cheaper for kids to buy cigarettes. Internet sales also offer smokers a way to evade tobacco and sales taxes, thereby keeping cigarette prices down and smoking levels up. Internet-based tax evasion also sharply reduces the amount of government tobacco revenues available to fund state and local efforts to prevent and reduce tobacco use and its harms.
The Problem
Up from only a handful in the late 1990's, more than 500 web sites currently sell tobacco products.
Internet tobacco sales are growing rapidly and account for 14 percent of the total U.S. market in 2005, according to a Prudential Securities report.
The number of smokers who had ever purchased cigarettes over the Internet had grown from 1.1 percent in 2000 to 6.7 percent in 2002, according to a New Jersey study, with similar increases in the number regularly buying over the Internet. Since 2002, the problem has likely increased enormously.
Kids as young as 11 were successful more than 90 percent of the time in purchasing cigarettes over the Internet and there was little effort to verify the age of Internet cigarette purchasers at the time of purchase or at the time of delivery, according to a study in the September 10, 2003, issue of The Journal of the American Medical Association (JAMA) (see the Campaign's statement).
Three-quarters of all Internet tobacco sellers explicitly say that they will not report cigarette sales to tax collection officials, thus violating Federal law, according to the U.S. General Accounting Office.
States lose as much as $1.4 billion annually in uncollected tobacco taxes through Internet sales, according to a study by Forrester Research Inc., a private research firm.
Responses to the Problem
There currently is no effective legislation to address the Internet tobacco problem pending in the U.S. House of Representatives or the U.S. Senate. However, in December 2003, the full Senate by unanimous consent passed the Prevent All Cigarette Trafficking Act, or PACT Act (S. 1177), introduced by Senators Orrin Hatch (R-UT) and Herb Kohl (D-WI). Public health groups have written a letter to Senator Hatch urging that the PACT Act be reintroduced during the current Congress.
The PACT Act comprehensively addressed the growing problem of tobacco excise tax evasion caused by Internet sales of tobacco products by:
requiring that Internet sellers ensure that all state excise taxes have been paid on any cigarettes or smokeless tobacco they send into a state, with all required tax stamps affixed;
requiring all Internet sellers to register with those states to which they are making sales and to comply with all state tobacco tax laws as if the Internet seller were based in the state;
allowing states to block the delivery of cigarettes and smokeless tobacco sold by Internet sellers that fail to register with the state or otherwise fail to comply with federal or state law; and
giving state officials the right to bring elusive Internet sellers into federal court and to collect comprehensive injunctive and equitable relief, including monetary damages.
The Campaign and other public health groups strongly supported the PACT ACT and also supported similar federal legislation in the last Congress in the U.S. House of Representatives (H.R. 2824), introduced by U.S. Reps. Mark Green (R-WI) and Martin Meehan (D-MA). The House Judiciary Subcommittee on Courts, the Internet and Intellectual Property unanimously passed this bill on October 2, 2003.
The public health community also supported legislation introduced by Rep. Meehan (H.R. 3047) in 2003 that would protect kids by requiring effective age verification both at the point of purchase and the point of delivery for Internet tobacco sales.
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