PROVIDENCE, R.I. (AP) -- Nearly three months after police busted a cigarette-smuggling ring that authorities say cost Rhode Island $5.7 million in tax revenue, Gov. Lincoln Chafee wants to increase the number of investigators working on a tobacco enforcement task force from one to five.
Chafee's budget plan estimates that spending $156,220 to add four investigators would boost tobacco tax collections by $2.9 million. Chafee is also calling on lawmakers to increase the state's cigarette tax from $3.46 per pack to $3.50 per pack to boost revenues by $1.6 million. The state has the second-highest tobacco tax in the nation.
All together, the plan would increase tobacco revenue by $7.1 million to nearly $136 million in the fiscal year that starts on July 1.
The proposal for more investigators comes as administrative hearings are being scheduled for 17 stores where authorities allege contraband cigarettes tied to a smuggling ring were being resold. The Division of Taxation says it is prohibited by law from identifying the stores or specifying what action it wants to take against them.
Rhode Island Tax Administrator David Sullivan said in an email that state law allows authorities to seize contraband cigarettes and bill retailers for taxes and penalties. He also said the state has the authority to suspend or revoke a retailer's license to sell tobacco. There are 1,300 retailers authorized by the state to sell cigarettes, said Chief Revenue Agent Neil Downing.
State and federal authorities in November announced that they had broken up a cigarette smuggling ring, seizing more than 168,000 cigarette packs in Rhode Island, Virginia and South Carolina and charging five people.
Tarek Shikh Alard, who was among those charged in state court, said in a telephone interview that he was not aware there were contraband cigarettes in his Providence store and that he is appealing a $25,000 fine levied by the state. He added he's selling his business, saying state laws make it too difficult to earn money.
"They're not fair to business," he said. Defense attorney Robert Mann said Shikh Alard's criminal case is pending.
Massachusetts resident Mohamad Mohamad, who was accused by authorities of bringing contraband cigarettes into Rhode Island, has a change-of-plea hearing scheduled for Thursday in U.S. District Court in Providence. A not guilty plea was entered on Mohamad's behalf last week on one count of selling and distributing more than 10,000 contraband cigarettes.
A plea agreement signed last month says Mohamad had nearly 3 million contraband cigarettes worth more than $505,000 in Rhode Island cigarette taxes when he was arrested Nov. 8.
Authorities allege Mohamad traveled to North Carolina, South Carolina and Virginia to get cigarettes to sell in Rhode Island, where the tax is $3.46 per pack, according to an affidavit prepared by U.S. Department of Homeland Security Agent Joseph A. Sullivan. The tax is 57 cents per pack in South Carolina, 45 cents per pack in North Carolina and 30 cents per pack in Virginia, Sullivan wrote.
Messages were left for Mohamad's attorneys.
There are no comments yet