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Attorneys General Praise PACT Act Being Signed into Law

Blair Tinkle, General Counsel to the Association and Congressional Liaison

President Obama signed important legislation March 31 designed at cutting down on tax evasion by Internet tobacco sellers and stopping minors from receiving tobacco products through the mail. The “Prevent All Cigarette Trafficking” (PACT) Act (P.L. 111-154) also promises to enhance and improve both state and federal budgets and protects the health of our nation’s children. It will go into effect 90 days after being signed. The successful passage of the PACT Act, which has been a key legislative priority for NAAG since early 2003, is an enormous achievement for state Attorneys General and the public health community.

The PACT Act of 2009, introduced on May 21, 2009 by Sen. Herb Kohl (D-Wis.), has broad, bipartisan support, having passed the Senate by unanimous consent and passed the House by a vote of 387-25 with the leadership of Rep. Anthony Weiner (D-N.Y.). The PACT Act inhibits online sales of illegal tobacco products by amending the Jenkins Act to require all Internet retailers selling or delivering into a state to comply with all state laws relating to the collection of state and local taxes on cigarettes and smokeless tobacco products. It also curtails illegal activities of purveyors of contraband cigarettes where the final point of sale is to non-tribal members in other states. Additionally, the Act stops the number of rogue distributors of contraband tobacco products, seeking refuge from state regulation and taxes under the false guise of tribal sovereignty.

The PACT Act also offers relief for states suffering from budgetary deficits. Many illegal Internet sales of tobacco are hurting the economy by draining sizeable tax revenues from the states. This situation makes it impossible for law-abiding tobacco sellers to compete with illegal Internet sellers whose entire business is premised on evading taxes and other payment obligations, and avoiding identification requirements for sales to minors.

Since 2003, state Attorneys General have asked Congress to pass the PACT Act. NAAG letters in support of this legislation were sent to all members of the U.S. Senate in September 2003, March 2004, October 2007 and, most recently, March 18 of this year. Each of the four letters received the support of 50 or more state Attorneys General. The most recent letter, signed by 51 Attorneys General, was part of a successful effort to influence the House of Representatives, Senate and president to finally pass this important tobacco legislation into law.

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