ALBANY - In less than two weeks, the state plans to collect revenue from cigarettes sold to non-tribal members on Indian reservations.
But as the Sept. 1 enforcement date approaches, the proposal is becoming an increasingly contentious one for Indian and New York officials.
Tribes from across the state are mobilizing an effort to stymie the plan, a long-sought revenue source for the state that is expected to generate about $150 million this fiscal year.
Tribal officials say they are not backing down and are convinced the state won’t follow through. The Seneca Nation on Friday filed an injunction in federal court to delay the collection of cigarette-tax revenue on reservations. Earlier in the week, the tribe filed a lawsuit challenging the validity of the state’s plan.
“We had hoped to come to an understanding where the parties would have an orderly and agreed upon processing of the merits of our claims,” said Barry Snyder, the president of the Seneca Nation in a statement. “Unfortunately, the Nation now finds itself in the position of needing emergency relief from the federal courts to keep the State from implementing this illegal tax scheme.”
The flurry of legal activity came as the opposition to the state’s plan to collect tax cigarette-tax revenue from the reservations is hardening among the tribes. In what was called a “historic” meeting, members of the Iroquois Confederacy gathered in Rochester on Wednesday to express their disapproval with the state’s plan.
The confederacy is made up of the Cayuga, Mohawk, Oneida, Onondaga, Seneca and Tuscarora tribes.
“This was kind of unusual for them to come together,” said Sharon Linstedt, a spokeswoman for the Seneca Nation. “But this seemed to be a unifying umbrella issue for them to stand together. They didn’t have a specific plan of action, but they just pledged solidarity.”
If successful, the state’s enforcement would end a decades-long struggle of state officials to collect the revenue. The last attempt, in 1997, resulted in Seneca tribe members in Cattaraugus County occupying Thruway overpasses in protest. Fourteen people were arrested and two state troopers were injured during the protests.
State officials say they are ready to collect the tax and are moving forward with enforcement, despite the growing unease of the tribes. “We’re moving ahead in terms of our enforcement strategy with the agents,” said Department of Taxation and Finance spokesman Brad Maione. “That’s the focus right now.”
The state approved a plan in June to collect the revenue by taxing the wholesalers who sell cigarettes on the reservations, which would lead to higher prices there. Members of the tribe would not be taxed for buying cigarettes on the reservations and could opt into a coupon program.
The proposal was coupled with a $1.60 hike in the per-pack price on cigarettes to $4.35 in an effort to balance the state’s budget, a plan that is expected to generate $300 million. As a result, cigarette sales have taken a nosedive in July.
Department of Taxation and Finance data indicates that tax stamp sales declined from May to July by about 28 percent. There was, however, a spike in June as smokers loaded up on cigarettes prior to the increase. They sold 1,603 stamp rolls in June, up from 1,318 in May. In July, 955 rolls were sold.
New York retailers, particularly stores located on border, have taken a hit in their cigarette and tobacco sales, they reported. But the industry is hopeful the state will follow through on its collection plan this time in order to offset sagging sales.
James Calvin, president of the state Association of Convenience Stores, said the state has long had the right to collect taxes on Indian reservations, but it hasn’t had the political will to do so. “There isn’t any reason why the state cannot collect these taxes. It’s always come to a matter of political will,” he said, adding he’s hopeful but skeptical this time.
Mark Emery, a spokesman for the Oneida Nation, went further in his skepticism. “None of New York’s previous efforts to impose taxes on sovereign Indian nations have ever succeeded, and there is no reason to believe this latest effort will succeed either,” Emery said.
He added that the tribe is willing to sit down and resolve the issue outside of the court system. “When New York is ready to engage with the Oneida Nation on a government-to-government basis in which the parties respect each other’s interests, we’ll be ready to negotiate a final resolution that is fair and legal,” he said.
E.J. McMahon, the director of the Empire Center for New York State Policy, said the state is on solid legal ground if it came to a court battle. Still, the state’s windfall from collecting the tax will probably not be immediate, he said.
“I think they need to recognize that they’re not likely to get the whole amount as soon as they hope,” McMahon said.
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