In 2007, the first year that a $1-a-pack cigarette-tax increase was in effect, Texas was No. 1 in the nation in the volume of cigarettes sold online, according to a market study on behalf of the largest U.S. tobacco company.
The study by ComScore Inc., which compiles data on how people use the Internet, found that about 17 percent of all online purchases of cigarettes in 2007 were made by customers in Texas.
"What’s amazing is that before Texas added the $1-a-pack tax, their Internet sales [for cigarettes] were about 1 or 2 percent of the total U.S. market," said Bill Phelps, a spokesman for Altria, the parent company of Philip Morris.
The state sales tax on cigarettes is paid at the point of sale. Most Internet vendors don’t charge state or local taxes, but purchasers are still technically required to pay them. A 2006 lawsuit settlement made clear that states have the right to examine the books of Internet cigarette vendors, but the effort to do so generally costs more than the amount of taxes that could be collected, the Texas comptroller’s office has said.
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