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State unveils high-tech cigarette tax stamp

December 28, 2010 |  3:50 pm

California tax officials have a new weapon in the war against cigarette bootleggers.

On Tuesday, the California Board of Equalization unveiled its latest high-tech tax stamp. The device, which will appear on legally authorized cigarette packs beginning Jan. 1, uses special inks that shift colors from yellow-gold to green. Each stamp also includes a unique serial number and more encrypted information than the last version of the tax stamp, released in 2005.

The encrypted information, which can be scanned by inspectors, shows whether a stamp is legitimate and how the product moved from factory to distributor.

Cigarette tax evasion costs California $182 million a year. That figure, though significant, has been reduced by $133 million in recent years, thanks to improvements in stamp technology and tightening of licensing and enforcement laws, said Anita Gore, a board spokeswoman.

"What we have found with the high-tech encrypted stamp is that it can’t be copied," Gore said. "Now with the color-shifting-ink component, even the image will be more difficult to copy.  Making the stamp more difficult to counterfeit stops the sale of illegal cigarettes by those who would try to undercut the legitimate sale of cigarettes by mom-and-pop retailers and others who are just trying to follow the rules and make a living."

California's cigarette tax is 87 cents per pack, a higher rate than in other Western states. The state tax in Nevada is 80 cents, in Wyoming 60 cents and Idaho 57 cents per pack. The average tax in states that grow tobacco is 48.5 cents.

A $1.01 federal excise tax also is collected on each legal cigarette pack.

More information on the new tax stamps is available at  http://www.boe.ca.gov/pdf/pub403.pdf.

-- Marc Lifsher

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