ALBUQUERQUE (KRQE) - While cigarette taxes contributed $92 million to New Mexico’s general fund last year, some business owners cost the state tens of thousands of dollars every year by not paying the tax, according to the state Tax and Revenue Department.
“Those are the dollars that take care of education, our streets, our fire protection, our police protection,” said Demesia Padilla, Tax and Revenue Department cabinet secretary. “Everybody who is honest gets to pick up the tab.”
KRQE News 13 went undercover two weeks ago and bought two packs of cigarettes at a Chevron gas station in the Albuquerque area and found the tax stamp on the bottom of the packs had been scraped off.
Then a reporter bought the exact same two brands at another store and compared the packs.
The packs bought at the Chevron station bore the remnants of a green tax stamp. The other two packs featured a white tax stamp on the bottom.
The white tax stamp is the normal stamp used to indicate that the retailer paid the $1.66 a pack in taxes the state requires.
A green stamp, however, indicates something completely different. Green stamps mean the cigarettes were bought at a tax-free discount either on the black market or on an Indian reservation and then resold illegally at the Chevron station.
KRQE News 13 paid about $7 a pack for those cigarettes, which is more or less the normal price. That means the owner of the Chevron station kept the difference instead of giving the state its share of the pie.
State tax and revenue officials consider such cigarettes “contraband” and told News 13 they find businesses trying to dodge cigarette taxes frequently.
The state confiscated more than 2,700 illegal packs of cigarettes in 2012, though that’s just a drop in the bucket. That’s because state tax and revenue inspectors only do cigarette spot checks at 7 percent of businesses in the state that sell cigarettes.
In 2012 that translated into 50 inspections, which resulted in 12 lawbreakers.
“We’re not going to tolerate it if you’re not in compliance,” Padilla said.
News 13 tracked down the owner of the Chevron station where the contraband cigarettes were bought. He agreed to speak on camera only if he wasn't identified by name or the address of his business.
“I did not know,” the man said at first before changing his tune. “I should not be lying to you. I knew I was involved in this.”
He said he was simply trying to make some extra money in a tough economy.
News 13 asked him how he got the contraband cigarettes.
“Some people from different locations,” he said.
“They sold them to you?” News 13 asked.
“Yeah,” he said.
“And then you sold them to other people?”
“Yeah, that’s true,” he said.
State tax and revenue agents raided the Chevron last week and confiscated dozens of packs of cigarettes that didn’t have the proper tax stamp. They will be destroyed.
In the meantime, the business owner said the raid scared him and he won’t skirt the tobacco tax again.
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