UNPAID SIN TAX- Oh dear, oh dear, we hear that UPS may have to cough up US$247 million to pay a fine for shipping cigarettes to New York City and the state without the payment of appropriate taxes.
District Judge Katherine Forrest of Manhattan ruled that UPS needed to pay a large fine because of the gravity of the infraction, which involved shipping more than 683,000 cartons of fags since 2010.
Like in practically every other civilised country in the world, cigarette taxes (also called “sin taxes”), are a major source of revenue in the U.S. Alcohol, another sin, is also taxed at high levels.
According to the Tax Foundation, the federal tax on a pack of 20 cigarettes is $1.0066. New York has the highest tax of any state at $4.35.
In her ruling, Judge Forrest said that UPS ignored “red flags” that its brown trucks were being used to transport untaxed cigarettes from Indian reservations.
The suit alleged that tobacco retailers located on upstate reservations were given price discounts for shipping in volume. It said delivery drivers were allowed to accept gifts from shippers and that account executives, whose compensation was tied to keeping big accounts, ignored signs that some customers signing delivery contracts dealt in cigarettes.
The Atlanta-based integrator argued it followed the rules and would appeal the decision, calling it “excessive and far out of the bounds of constitutional limits, particularly given that the shipments at issue generated around US$1 million in revenue.” A pittance for cancer-causing fags.
We love logistics…and cigarettes