Cigarette Tax Revenues Up In Smoke?

The city says it has new evidence of illegal cigarette sales on a Native American reservation on Long Island. Undercover agents secretly videotaped the sale of untaxed cigarettes on the Poospatuck reservation.

City investigators told the sellers they were buying cigarettes to sell in New York City. Only Native Americans are allowed to purchase untaxed cigarettes for personal use or to sell to other members of the tribe.

Mayor Michael Bloomberg says the Native American tribe has already sold more than 4 million cartons this year — with only 296 people actually living on the reservation.

"That works out to more than 523 packs a day for every man, woman and child living on the reservation," Bloomberg says.

The mayor has long accused smoke shops on the reservation of selling untaxed cigarettes that make their way to the city. Officials say that the city and state lost about $1 billion in tax revenue last year from illegal cigarette sales.