Wednesday, January 20, 2010

Showdown Looming Between New York State And Indian Nations Over Tobacco Sales

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This installment of The Tribes In The Media is a Post-Journal article on the looming showdown between the state of New York and one of the Indian nations within its borders.

New York Governor David Paterson asked the federal government in October for help if confrontations result from the state's intent to collect state taxes on cigarettes sold on Indian reservations in that state.

Gov. Paterson's letter to the U.S. Attorneys in Brooklyn, Syracuse and Buffalo noted the "likelihood of violence and civil unrest" if he began enforcing the state tax on Indian reservations in New York. Recent New York governors have chosen not to collect the tax but projected state budget deficits are adding pressure on officials to enforce the tax collection.

State, Senecas Set Six-Month Deadlines
By Sharon Turano
Post-Journal
January 20, 2010

Seneca Indians have been put on notice that the state will have rules and regulations in place to begin tax collections on sales made on their land in about six months. In turn, at least one Seneca is thinking about giving notice to the state about what could be done in the same six-month time period.

During his Tuesday budget presentation, state Gov. David Paterson said the state's Taxation and Finance Department will "withdraw its advisory opinion regarding forbearance" of the sales.

This means the department will put in place a tax-exempt coupon system so Native Americans purchasing cigarettes can do so tax-free while others visiting tribal stores will pay the tax. The move is expected to satisfy an injunction issued previously by State Supreme Court Judge Rose Sconiers, who said the state could not collect the tax until such a system was put in place to allow Native Americans to remain exempt from the taxes.

"Local businesses need parity," said Paterson during the budget address portion relating to the tax collections. Currently tribes, including the Seneca Nation of Indians and its individual entrepreneurs, can sell cigarettes tax-free on their land, which has raised the ire of nearby businesses that charge an increasing tax on the same product.

Paterson called his plan "an opportunity to survive" for those neighboring businesses. He said the measure means "no disrespect to Indian Nations," but, rather, "equality of opportunity."

"Our businesses are suffering and closing," he said, adding there is "an unfair standard" regarding the tax-free status.

"No one can question Gov. Paterson's sincerity in wanting to resolve this long-standing dilemma. We applaud his commitment to fully and fairly enforcing the tax collection law, and our stores are eager to help New York State collect all the tax revenue it is entitled to," said James Calvin, executive director of the state Association of Convenience Stores, which has supported the tax collection. He said, however, the association has dealt with 15 years of delay of collections, leaving its members skeptical.

Calvin also questioned another Paterson initiative mentioned Tuesday, to increase state taxes on cigarette sales.

"It would be a mistake, however, to further increase the cigarette tax rate prior to the enforcement initiative, because it would only make the current tax-evasion epidemic worse. First things first - recapture the hundreds of millions of dollars in cigarette tax revenue that is escaping at the current rate, then examine whether any change in the rate is really necessary," he said.

Although Calvin questioned what will be done before the tax collections, Senecas have some ideas of their own.

The six-month time frame could give the Seneca Nation, along with individual merchants selling the cigarettes, time to mount their own opposition to the Paterson plan. Senecas have previously voiced concern that state attempts to collect the tax violate treaties the tribe has with the United States.

"It's no big surprise," said J.C. Seneca, chair of the nation's foreign relations committee. "Anytime the governor proposes a budget it seems to include revenues from taxation of our sales.

"Certainly in these times ... it's disheartening," he said, adding the state had two paths, one of dialogue and working together with the nation or one of conflict. He said dialogue that could have been productive, but positive was not the direction the state has chosen.

"The governor has failed to provide that," said Seneca. "So far he is taking the path of controversy," said Seneca, adding that needs to change. Therefore, he said, the nation has to do what it needs to survive. Seneca said the nation employs more than 6,000 people through smoke shops and gaming enterprises.

"That's a lot of families," he said, adding the nation will "look out for their best interests."

Although its next course of action must be determined by the nation's governing body - the Tribal Council - Seneca said maybe he should propose giving the state a similar six-month notice about whether it can continue to use Seneca territory such as is done for the New York State Thruway, which passes through Seneca land. There are other long-standing issues, he said, such as promises by the state the nation does not feel have been kept pertaining to Interstate 86 going through the land.

"They're initiating a law to destroy our economy," said Seneca, adding the nation has to hold the state to its agreements.

Seneca opposition to state tax collection attempts previously resulted in protests, which Seneca said happens when people feel backed into a corner. He said the nation is not backed into a corner yet, but, he said, there may be a time in the future when its people feel that way. Although he said the nation does not condone such behavior, he said it "won't be predicated by Indian people," but, rather the state's refusal to recognize treaties and contributions of Senecas.

"They are the ones that would be responsible," he said about the state's officials.