Local tribe shuns state cigarette tax

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September 1, 2010

By DENISE A. RAYMO ANDREA VanVALKENBURGStaff Writers The Press Republican Fri Sep 03, 2010, 03:32 PM EDT

AKWESASNE — On Wednesday, the state was supposed to begin collecting $4.35 per pack on cigarette purchases made by non-Indians on the Akwesasne and Ganienkeh reservations.

But a lawsuit filed by filed by the Seneca and Cayuga tribes in western New York has resulted in a temporary restraining order that halted collection of the taxes on reservations statewide.

DISAPPOINTED

According to Jessica Bassett, deputy press secretary for Gov. David A. Paterson, the decision enjoined the Department of Taxation and Finance from implementing the new tax law.

“We are disappointed today that the Appellate Division has stayed the implementation of our statute and regulations with respect to licensed stamping agents,” she said. “Despite this ruling, we believe the state’s legal arguments are sound, and we believe that ultimately the state will prevail in this matter.”

The St. Regis Mohawk Tribe in Franklin County also has a separate lawsuit pending on the issue.

HIGHER COST

The move would have raised the average price from $27 to $70.50 per carton for national-brand smokes and from $13 to $56.50 on cartons manufactured at the St. Regis Mohawk reservation at Akwesasne.

Akwesasne-based businesses sell about 700,000 cartons of cigarettes a year, according to tribal officials.

The state said income from these tax collections was expected to total $150 million this year.

SEPT. 1 START DATE

New York passed a reservation-taxation law in the 1990s, but protests flared around New York when the state tried to collect.

The issue has been discussed from time to time since then, but it surfaced again in June when Albany ordered wholesalers and tax-stamp agents to begin charging customers a tax for all the smokes sold, starting Sept. 1.

COUPON SYSTEM SHUNNED

St. Regis Mohawks, like the other reservation communities in the state, were given the choice until July 31 to participate in a coupon system that would have allotted Akwesasne stores 119,000 coupons for dispersal to Indian buyers so they could get refund on their purchase of smokes.

The number of coupons issued per reservation is based on tribal-membership numbers and a formula the state used to calculate how many would be needed on each territory.

But tribal officials were concerned that there was no guarantee that each store would receive enough coupons to give their customers and that the system would force Indians to implement a state-government policy.

The Mohawks asked for an increase in their allotment, but later withdrew the request when community members objected to leadership seemingly agreeing to the state’s plan.

They asked the council to look at alternatives, such as withholding casino funding and a boycott of some kind to express their disapproval of the tax collection.

LAW INTERFERES

St. Regis Mohawk officials filed a lawsuit Aug. 24 challenging the law, saying the state’s “tax scheme” violates the tribe’s right to self-governance in violation of federal law.

“We have valid concerns about this New York state law and how it infringes on our territory and on our self governance,” Tribal Chief Monica Jacobs said in a statement Wednesday.

“The intent of this law is clearly to interfere with our internal affairs.”

The St. Regis Mohawk Tribe has the legal right to regulate business in its territory, including the sale of tobacco products, she said.

“Our tribal businesses are the heart of our economy. They generate revenue to support health, law, education and other programs that benefit the community.

“The state of New York is prohibiting us from continuing our economic development for our territory.”

Tribal officials said they plan to pursue every legal avenue to oppose the move.

A preliminary hearing on the tribe’s case has been scheduled for early January.

Attempts to reach managers of several businesses selling cigarettes on the reservation were unsuccessful Wednesday.

An employee at Tarbell Management Group — the company that owns The Bear’s Den Trading Post and Bear’s Den Restaurant, the Eastern Door Convenience Store and the Western Door Convenience Store — said the company was referring all media inquiries to the tribe’s compliance office.

STATE POLICE READY

Paterson has admitted “there could be violence and death as a result of some measures were taking,” but he said at the time that the tax collection should go on as planned.

The governor said the state “is on high alert,” but as of Wednesday afternoon, State Police had not been ordered in to quell any disturbances.

“We’re not going to anticipate or have any speculation about possible protests,” Sgt. Kern Swoboda of the State Police Division headquarters public information office in Albany told the Press-Republican Tuesday.

“At this point, the courts are deciding on the situation.

“We’re cognizant of the concerns that there may be protests. If the situation changes, we will evaluate the matter accordingly.

“But our main concern is public safety. Our first concern is the safety of the public.”

‘SENSITIVE ISSUE’

Cigarettes are also sold at Mohawk Ganienkeh Territory in Altona in Clinton County.

Clinton County Treasurer Joseph Giroux said that in talks with the Governor’s Office earlier this year, the county was told that it could get a share of the tax revenue collected.

“But we haven’t heard anything yet, and it is still a very sensitive issue,” Giroux said Wednesday.

— Contributing Writer Casey Ryan Vock added to this report.