TRENTON – A measure sponsored by Senator Joseph F. Vitale which would direct the Division of Treasury to look at a more secure cigarette tax stamp to prevent counterfeiting was approved today by the Senate Budget and Appropriations Committee by a vote of 13-1.
“New Jersey loses out on millions of dollars in tax revenue each year to counterfeit tobacco stamps,” said Senator Vitale, D-Middlesex, and the Chair of the Committee. “As we try to come to grips with chronic budgetary gaps and put New Jersey back on sure financial footing, we cannot leave millions of dollars in existing tax revenue on the table. We need to make the most of our State’s revenue sources, and that means making it harder for tax cheats to scam the system.”
The bill, S-1545, would direct the Division of Treasury to study the use of counterfeit-resistant tax stamps to be used on cigarettes sold in New Jersey. The new stamps would have hidden or encrypted information contained within them, indicating the name and address of the cigarette distributor, the date the pack of cigarettes was stamped and the cash value of the stamp. The bill would also require that these stamps be readable and traceable from the point of stamp production to the point of sale of the cigarettes.
“Counterfeiting has become more and more sophisticated, and current safeguards have not been enough to ensure that people are paying their fair share of tobacco taxes,” said Senator Vitale. “We need to constantly challenge the State to remain state-of-the-art, and adopt tax stamp technology which cannot be easily replicated by crooks looking to shirk their tax responsibility.”
Senator Vitale noted that New Jersey loses out on millions in tax revenue due to counterfeit cigarette stamps and smuggled cigarettes. According to estimates from one counterfeit-resistant stamp manufacturer, nearly 35 percent of cigarette packs entering New Jersey for sale are counterfeit, either because they are unstamped or bear a counterfeit stamp. The State could collect an estimated $20 – 40 million annually by moving to a more secure, counterfeit-resistant stamp.
“More than half of New Jersey’s tobacco tax is dedicated to healthcare programs and smoking cessation initiatives,” said Senator Vitale. “When counterfeiters cheat the State out of millions, those dollars aren’t used to fuel some faceless bureaucracy, but ensure that kids in greatest economic need have access to the quality healthcare. New Jersey needs to do a better job in ensuring the validity of tobacco tax stamps, so that we can meet our Statewide obligation to help those who need us the most.”
The bill now heads to the full Senate for consideration.