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Governor’s Signature on Cigarette Tax Bill Escalates Tobacco War

Indian Country Today, News Report, Gale Courey Toensing Posted: Dec 16, 2008

UTICA, N.Y. – The sovereignty battle over Indian trade rights was raised a notch Dec. 15 when New York Gov. David Paterson signed a bill intended to force the collection of state sales taxes on tobacco products sold to non-Indians in Indian country.

Paterson announced his approval of the bill at a press conference in Utica, N.Y. surrounded by legislators who sponsored the bill and elected officials who have long pressured the governor to pursue what they perceive as the state’s entitlement to a share of revenues from sovereign Indian nations.

The pressure reached fever pitch in the last year as the state faces budget deficits of tens of billions of dollars. Officials estimate the state could garner more than $62 million a year from the Indian tobacco trade.

“We profess great respect for the Indian sovereign nations and we expect to continue to demonstrate that respect for them, and what we are going to do today is try to alleviate an issue that’s existed for a very long time and we won’t be able to alleviate it just today, but we hope we’re taking steps in what will be a process that will reach that goal and that end. With the current financial situation, this tax will help bring extra revenue for the state,” Paterson said.

A spokesman for the Oneida Indian Nation said the new law will be challenged in court.

“The only thing assured by the bill being signed into law today is ongoing litigation,” said Mark F. Emery, director of media relations in the Oneida Nation Public Affairs Department.

“Rather than collecting money for the state, this bill collects money for lawyers who will be litigating the legality of this law. None of the state’s other efforts to infringe on sovereignty have worked, and there is no reason to believe this will work either. If the state is serious about resolving this issue, it will negotiate with Indian nations rather than constantly attacking them,” Emery said.

The bill would force wholesalers to sign an oath, under penalty of perjury, which would be filed with both the state and tobacco companies, saying that the cigarettes they sell would not be resold untaxed in violation of state law.

A state appeals court placed an injunction against a similar law passed in 2006 because the state tax department had not worked out a coupon system for reservation retailers to claim tax refunds on cigarettes sold to tribal members.

The new law is an end run around that obstacle, Paterson said.

“Seeing that we can’t get around that encumbrance, (legislators) introduced legislation that we will now ask for certification under penalty of law to those wholesalers that sell without collecting taxes. That’s in simple (terms) what the bill does. This is a new approach and we hope this will be an effective approach to solve this problem.”

In September, business leaders in the Haudenosaunee Confederacy vowed to collaboratively battle any attempt by New York State to interfere in the Indian tobacco trade.


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