Senecas Fear Act Will Harm Economy

A federal act that Seneca Indians say could harm their economy but a senate sponsor says will “snuff out” black market cigarette smuggling has passed the next hurdle on its way to becoming law.

The Prevent All Cigarette Trafficking Act, also known as the PACT Act, passed the Senate Judiciary Committee on Thursday. It was previously passed by the House of Representatives and will next go to the full Senate, although a vote has not yet been scheduled.

According to its sponsor, Sen. Herbert Kohl, D-Wis., the PACT Act will strengthen the reporting requirements for interstate cigarette sellers, increase criminal penalties for violators, create civil penalties for violations including reporting requirements and state tobacco tax laws, grant federal and state law enforcement officials more powers to investigate and prosecute violators, prohibit the U.S. Postal Service from delivering tobacco products.

Although Kohl said the act is necessary to curb illegal Internet sales that lead to funding criminal and terrorist activity, Seneca Indians report the act could jeopardize Seneca and non-Seneca businesses, their employees and the Seneca Nation government. Privately owned Seneca businesses take cigarette orders via phone and Internet and mail them, which the act would prohibit. The Seneca Nation licenses the businesses, which pay a fee for the licenses. Government revenues would therefore diminish if the entrepreneurs go out of business due to the law’s effect. The government revenues, Senecas report, go toward health and education initiatives.

Seneca Nation President Barry E. Snyder said Monday the law’s passage could result in up to a 65 percent loss in import/export revenue to the Nation, which funds health and education programs, along with a projected job loss of 1,000 Seneca and non-Seneca positions that stem from mailed cigarette order businesses.

Snyder said the Nation has a state-of-the-art stamping and enforcement mechanism that ensures compliance with a rigorous set of internal regulations, including retailer authorization, minimum pricing and a ban on sales to minors. The Nation works in close partnership with the Federal Bureau of Alcohol, Tobacco and Firearms Enforcement. He alleged the act would benefit big tobacco by steering customers to them and eliminating competitors, like those on Seneca territory.

After learning of the Senate Judiciary Committee’s passage, Snyder said there will be “significant economic harm to the Seneca Nation, its members, member enterprises and the Western New York Economy” if the law is passed. He said at a time of record unemployment locally, 1,000 jobs will be taken from the area as a result of the act. Snyder also questioned how President Barrack Obama’s recent pledge to help Indian could be made while the act was in the works.

According to Snyder, the PACT Act is a direct contradiction of President Obama’s statement to “reverse the U.S. government’s history of marginalizing and ignoring the plight of Indian nations.”

“We agree with the fundamental goals reflected by the PACT Act, that no one should be engaged in illegal cigarette smuggling. But cigarettes are a lawful product, and this PACT Act is nothing but a money grab …to destroy legitimate, treaty-sanctioned American Indian commerce,” said Snyder. “Senators supporting the PACT Act, especially the New York Senators, should ask themselves why are they letting (tobacco companies) take jobs and money from the Seneca Nation and the Western New York economy?”

Kohl reports the act’s intent is to crack down on illegal sales and send consumers to places of purchase where they pay taxes. Kohl said that cigarette trafficking, including the illegal sale of tobacco products over the Internet, costs states billions of dollars in lost tax revenue each year.

“As lost tobacco tax revenue lines the pockets of criminals and terrorist groups, states are being forced to increase college tuition and restrict access to other programs because of these lost revenues,” he said.

The Internet represents a new obstacle to enforcement, said Kohl. Illegal tobacco vendors around the world evade detection by conducting transactions over the Internet, and then shipping their illegal products around the country to consumers. Just a few years ago, there were less than 100 vendors selling cigarettes online. Today, approximately 500 vendors sell tobacco products over the Internet, he said.

How that number effects Seneca businesses and whether the law will be passed by the Senate remains to be seen.

By Sharon Turano, Postjournal
November 24, 2009

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