Skip to comments.UPDATE: A truce in cigarette tax ’wars’
Posted on 08/31/2010 6:22:54 PM PDT by Drango
BUFFALO (AP) A federal judge has temporarily blocked New York states plans to tax the Seneca and Cayuga nations sales of cigarettes to non-Indian customers.
Judge Richard Arcara Tuesday granted a request by the tribes for a court order that stops the state from imposing a $4.35 per pack sales tax on cigarettes sold by reservation retailers starting on Wednesday. The ruling delays those collections for at least two weeks. It wasnt immediately clear if the state will go ahead with taxes on other tribes.
Attempts to collect the tax in the 1990s resulted in sometimes violent protests on Seneca lands.
The Senecas the biggest player in the business and Cayugas argued the policy change violates sovereign rights and will damage their economies.
The cash-strapped state sees the tax as a potential $200 million source of annual revenue.
Here's reporter Scott DeSmit's story from yesterday:
TONAWANDA SENECA NATION The man was in the parking lot at Totem Pole Smoke & Gas shoving two cardboard boxes into the bed of his pickup truck.
He covered the boxes with a tarp and closed the window on the cap.
The man, from Rochester, had more than 75 cartons of cigarettes inside the boxes, worth more than $1,500.
Youre only allowed two, he said of the state law that, for now, allows an individual to possess two untaxed cartons. But after Wednesday we might not be able to buy any.
The man, who did not want to give his name, said he was on a road trip buying cigarettes for himself and a list of friends. He said he usually comes to the Tonawanda Nation once a month but he, like many others shopping Monday, was making a last-ditch purchase as the state prepares to begin taxing Native American cigarette sales.
A State Supreme Court judge on Monday lifted injunctions that prevented the state from collecting the $4.35 per pack tax. The injunctions were set in 2009 by another judge and the state appealed.
Lawyers for New York and for the Seneca Nation and other tribes are expected to argue again in federal court today.
Its really crazy. We dont know whats going on, said Jesse Spring, whose father, Neville, owns The Rez Smoke Shop. Were kind of waiting for the first (Sept.1).
If the state begins taxing, Spring said members of the Six Nations, as a whole or as individual tribes, would file lawsuits against the state.
The issue has been a long-running battle for Native Americans and the state. Gov. David Paterson last week promised to begin collecting taxes Wednesday. The taxes will be collected from wholesalers sending cigarettes to the tribes.
Paterson said state troopers would be kept off reservations to avoid trouble but said he expected there would be violence, as there was in 1992 when a similar situation occurred.
In Basom, car after car pulled onto the reservation, passing signs such as Let the fires begin, a reference to debris burning in 1992 along the Thruway.
The Tonawanda Nation has 11 cigarette and gas outlets employing hundreds of people. Most shops had little or no major brand cigarettes but still had cartons of Native-made brands such as Senecas.
The Six Nations are hoping that if the state does begin taxing they would still be able to transport Native-made cigarettes to smoke shops across the state.
Spring said a peaceful rally is planned for 9 a.m. Wednesday on the Cattauraugus Reservation.
Friday, about 100 members of the Tonawanda Nation marched and carried signs in a peaceful protest against Paterson. Customers were asked to contact state officials to voice their opinions.
A federal judge has put the tax on hold for some of the reservations.
Next our government will tax you for a beer you get in Spain.
This particular action violates the Treaty of Paris and could allow hotheads to restart the American Revolution.
I guess the treaties means nothing. So much for the rule of law. The State of New York has signed treaties with the Indians but now it’s inconvenient because the State of New York needs the tax money. The cost of a pack of cigarettes in NY is almost $10.00 a pack and they wonder why nobody is buying cigarettes and they don’t have the tax revenue they used to have. Duh!
In this action for declaratory and injunctive relief, the issue is whether the State Department of Taxation and Finance may require plaintiff, an enrolled member of the Seneca Nation, to collect and remit sales, use and excise taxes on sales of cigarettes and motor fuel to non-Indian consumers at plaintiff's retail business on the Cattaraugus Reservation. Because the issue is directly governed by controlling precedent, we affirm the order of the Appellate Division dismissing plaintiff's complaint.
The United States Supreme Court has clearly established that State tax statutes requiring Indian retailers to collect and remit taxes on sales to non-Indian purchasers, and to keep the records necessary to ensure compliance, violate neither the Commerce Clause nor the constitutional proscription against direct taxation of Indians absent explicit Congressional consent (see, Oklahoma Tax Commn. v Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 US 505; Washington v Confederated Tribes of the Colville Indian Reservation, 447 US 134; Moe v Confederated Salish & Kootenai Tribes, 425 US 463). To the extent plaintiff contends that the State tax statutes at issue violate either the Supremacy Clause or New York law, his arguments are unpreserved and cannot be considered on this appeal. Plaintiff's complaint asserted only violations of the Commerce Clause and "the Laws of the United States enacted pursuant thereto".
Regardless of the judge’s ruling, a suggested way that the Seneca nation could tell NYC and Paterson to stick it is:
Under the treaty they are a sovereign nation/entity. As such use US Custom Duty laws. The last time I came back from a foreign, i.e. sovereign, country I had to fill out a Customs/Tax Duty claim form declaring what I purchased. I was able to bring in what I bought tax/duty free if the amount I brought into the US was less than $600.00 and over the prior six months I had not claimed $600.00 or more as duty free, including what I was bringing in at that time. So the tribe ought to us the same duty/tax claim forms and visitors claim up to $599.99 as duty free.
Am not a lawyer nor expert in this area but it is a thought. Federal duty/customs laws trump money grabbing NYC demorats.
“I guess the treaties means nothing. So much for the rule of law. The State of New York has signed treaties with the Indians but now its inconvenient because the State of New York needs the tax money. The cost of a pack of cigarettes in NY is almost $10.00 a pack and they wonder why nobody is buying cigarettes and they dont have the tax revenue they used to have. Duh!”
General rule when dealing with treaties, if you don’t have the firepower to back it up the treaty is worthless. Indians (AKA: Native Americans) should be very familiar with how well US and state governments keep treaties by now. Also, I’m surprised more smokers haven’t started gardening, tobacco is pretty easy to grow and curing the leaves isn’t all that difficult. Not as easy as growing pot but at least you don’t have to worry about a night time visit from the cops ;)
Well, I (that’s in me) think they should leave the Indians and the people of New York alone. I don’t smoke and never have, but I respect the right’s of others to do so without extraordinary penalty. . . . : D
You are a genius. You'd think some of the smokers would think of this. : D
I’ll have to remember this when I get gas from the Reservation. I’ll mention it to them. We actually go out of our way to buy gas from the Reservations when we travel the NYS Thruway.
I’ve heard they are very pretty plants too.
One of the gardening shows on Create used them in beds.
If smokers started growing their own tobacco in any amounts that impacted tax revenues, you can bet that the tax authorities would quickly close that loophole as well.
But you only get one crop a year.
Or as cigarette stores are doing, taking advantage of a legal loophole:
WOOD DALE, IL Several U.S. tobacco retailers are selling deeply discounted roll-your-own-cigarettes, taking advantage of a federal tax loophole, the Wall Street Journal reports, a practice that has attracted scrutiny from regulators and tobacco companies.
Roughly 150 tobacco outlets across 20 states have deployed high-speed roll-your-own machines that produce a carton of cigarettes in just eight minutes, a cost that is in many cases half that of a carton of premium smokes. However, some regulators maintain the stores may be violating U.S. and state laws regarding cigarette manufacturing.
“These machines raise a number of questions,” said David Rienzo, an assistant attorney general in New Hampshire, which has sued several roll-your-own retailers alleging they are acting as cigarette manufacturers and should therefore pay applicable fees.
The retailers are exploiting the tax loophole, using tobacco labeled pipe tobacco. Such a designation presents (for now) a substantial cost savings, as the federal excise tax on pipe tobacco is $2.83 a pound, compared with $24.78 a pound for rolling tobacco.
Tobacco manufacturers, too, are crying foul at the loophole that has created low-priced competition. “We are complying with the law, but some companies are not doing so in order to gain an unfair advantage,” said Ron Bernstein, chief executive of Liggett Vector Brands Inc., a unit of Vector Group Ltd. that is the fifth-largest U.S. cigarette maker by sales.
Since the tax on rolling tobacco increased 14 months ago, the volume of pipe tobacco sold in the U.S. has more than tripled to roughly 21 million pounds, according to the U.S. Treasury’s Alcohol and Tobacco Tax and Trade Bureau. During the same time, rolling tobacco sales volume has dropped about 60 percent.
Meanwhile, the Treasurys tobacco-tax bureau is working on clarifying the distinction between pipe tobacco and rolling tobacco, a process that is expected to take months.
If the ruling is enforced, working men and women on the Rez will lose their jobs as sales to outsiders fall. More will go on welfare and unemployment.