Conflicts because Cigarette Taxes

Published on November 5, 2009 9:47 AM

New York Police are worried that a government effort to stop the run of tax-free cigarettes onto New York’s Indian reservations would lead to violence and possibly worsen into a military problem.

The governor’s chief legal counsel, Peter Kiernan, told that the cost of enforcing order could run as much as $2 million per day, a figure based on the state’s experiences when it tried to impose cigarette taxes on the reservations in 1992 and 1997. Those efforts ended after members of the Seneca tribe set up blockades on state streets, set fires and in some cases wrangled with soldiers.

Still, J.C. Seneca, tribal councilor to the Seneca Nation, made it clear that the tribe takes its independence seriously. J.C. Seneca said: "Your government has no authority to collect taxes in our territory. We will fight to uphold these rights, now and forever." For example a small group of Seneca expressed their defiance by lighting a fire near the state Thruway on the Cattaraugus reservation. State Police Capt. Michael Nigrelli reported that traffic wasn’t disrupted and Seneca leaders assured state police the demonstration would remain peaceful.

That’s why New York Government already enforced a law estimating taxes on cigarette sales to all users who are not members of a tribe, but a series of governors has declined to enforce it, in part because of the fear of trouble. In this way reservation shops have become some of the biggest cigarette suppliers in the state, selling hundreds of millions of cigarette packs a year. And some of that tobacco product is bought by smugglers, who then carry cartons of cigarettes off the reservations and resell them elsewhere. A considerable percentage of cigarettes also are sold over the Internet to buyers around the country.

Paterson has pursued a dual track with the tribes, attempting to negotiate while also litigating the tax issue in state courts. Tribes in other states have signed revenue-sharing compacts with the states regarding taxation on cigarettes, but most of the largest New York tribes have rejected any such compromise. State Sen. Martin Golden, a Brooklyn Republican and a member of the committee on investigations and government operations, said that he wishes to start charging the tax whether the tribes agreed to it or not. He explained that the U.S. victory over the British during the Revolutionary War gave the government the right to tax its citizens, and he suggested that the tribes profited from state health, education and public works programs and should therefore be required to pay the same taxes.