Home > Americas > Judge Refuses to Block Tax on Indian Cigarettes; Tribes Warn of Violence

Judge Refuses to Block Tax on Indian Cigarettes; Tribes Warn of Violence

Posted: Monday, 30 August 2010 5:12PM

Buffalo, NY (WBEN/AP) — A State Supreme Court judge has refused to block the state from collecting taxes on cigarettes sold to non-Indians by Native American retailers.

The Seneca Nation of Indians had been trying to delay the taxation of reservation cigarette sales by challenging the way that New York adopted the regulations it intends to use to enforce the tax, beginning this Wednesday, September 1.

A lawyer for the Senecas argued in court Monday that state officials circumvented proper procedures by adopting emergency rules adopting emergency rules, outlining how the $4.35-per-pack tax would be imposed.

For that reason, the Senecas said, a 2009 court order blocking the state from taxing cigarette sales to non-Indian customers should remain in place. The state argued that the new regulations make that order moot, and it should be lifted.

A separate Seneca challenge to the tax is pending in federal court. U.S. District Judge Richard Arcara said last week he was going to wait to hear the State Supreme Court judge’s decision, before making his own.

Meanwhile, a Seneca Tribal Councilor is warning that if the state is allowed to proceed with its plan to levy the taxes starting on Wednesday, “some people could resort to violence.”

Listen to the full hour of Sugar Montour and Sandy Beach’s conversation.

WBEN Extra: Cigarettes, Sovereignty and Taxes

Sugar Montour told WBEN’s Sandy Beach on Monday, “In 1997, we had this issue with Governor Pataki. Governor Pataki took a position that, he was going to enforce the tax laws on the Seneca territory, and on other Native territories. We fought that vehemently. We fought it in court, and unfortunately, we ended up where we had a physical confrontation with New York State authorities.”

“Where we are today, we’ve learned a lot from that,” Montour said. He explained to Sandy Beach that one of the major changes that the Senecas and other tribes have made over the last 13 years is slowly phasing many national brands out of their inventories, and selling mostly cigarette brands that are manufactured on the reservations – brands including Seneca, Heron, Buffalo and others.

Montour noted that under the Indian nations’ treaties with the federal government, they are obligated to pay federal excise taxes on their tobacco products. But the state taxes, he says, only apply to national brands that Native Americans acquire from wholesalers. Native brands, he argued, should not be subject to state taxes. He also rejected the claim that not enforcing state taxes gives Native American tobacco retailers an unfair competitive advantage.

“When you hear the [New York State] Association of Convenience Stores and other different people saying yes, the taxes should be applicable, we can see where they’re coming from as New York State residents and citizens,” Montour said. “One of the things we also want people to understand is, in our jurisdiction, fees are paid. They’re paid to the Seneca nation. Eighty to 90 percent of [the cigarettes sold on reservations] are products that are made by Native people, mostly Senecas, and are distributed here on our territories and exclusively sold in Native stores. The argument that there’s an unlevel playing field; we feel that that has gone away. You can’t go into a local store and buy the Seneca brand.”

“We have come a long way in the last 13 years, and I think the legal system and the State Legislature have not been brought up-to-date on the changes in Indian country,” Montour remarked. We are paying the federal excise tax. We’re just alking about state taxes. People say, ‘Well, why should they not be taxed?’ All of our treaties are with the federal government. We pay our federal taxes.”

Montour summed his point up by saying, “Our argument is, we’ve made our agreements, we’ve made our treaties, we are following through on our side of that by paying our taxes.”

But the state doesn’t see it that way, and Montour has the sense that New York and its Native American population are on the fast-track to another confrontation like the one that happened in 1997.

“Unfortunately, should these things move forward the way they’re going… in two more days, I fear that there will be violence. I fear for my family, and I fear also for the people who are going to be sent here… maybe on our territories, maybe on the front lines… Natives fighting the State Police, fighting the Taxation and Finance Department. There is not a single instance where someone can say, ‘This is worth going to battle over.'”

The Seneca Nation issued this statement following the State Supreme Court’s decision:

“We are disappointed State Supreme Court Justice Siwek did not keep the tax impositions injunction in place, however,  our legal efforts are far from over. We will be filing an expedited appeal motion with the Appellate Division of State Supreme Court and we remain hopeful Judge Arcara will grant our request a Temporary Restraining Order in the separate Federal case. We will return to federal court tomorrow afternoon to renew our motion for the TRO. It is our intention to block the New York State from ever collecting a penny of tax on sales of tobacco by the Seneca Nation or any other Native American nation under this ill-conceived taxing scheme.”

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