Idaho Lawmakers Consider Taxing Reservation Cigarette Sales

BOISE, Idaho – Republican lawmakers in Idaho are starting a new push to tax cigarettes sold on Indian reservations – over tribal objections.

The AP reported today that House Speaker Lawerence Denney, R-Midvale, said his bill will help prevent Idaho residents from traveling to reservations just to get a good deal, while leveling the playing field for off-reservation retailers that bear the full burden of the state’s 57 cent-per-pack cigarette tax. Currently, the Coeur d'Alene Tribe in northern Idaho only charges a 10 cent tax per pack, while the Nez Perce Tribe near Lewiston charges just 24 cents.

The cigarette tax bill, due for a hearing in the House Revenue and Taxation Committee, would assess cigarettes at the wholesale level, before they're sold to reservation retail outlets.

More than just a tax policy bill, however, Denney's push highlights how relationships between Idaho's original residents and the largely white population that began migrating here in the early 19th century continue to produce powerful emotions – and suspicion among Indians that the dominant state government is still trying to exert unilateral influence over how their sovereign nations conduct their affairs, according to AP. It also mirrors a problem for tobacco retailers in many parts of the country where stores on Indian reservations maintain a huge price advantage over other dealers due to different levels of taxation.

“It's sending us the wrong message, by dropping a bill without consulting us,” said Coeur d'Alene Tribal Chairman Chief James Allan, who said no Indians were consulted on this bill. “We seem to be taking a step backward again,” he said according to AP.

The Idaho Indian Affairs Council, which includes legislators, tribal leaders and a representative of Gov. C.L. “Butch” Otter's administration, voted unanimously Feb. 23 to send a letter to the House urging that a hearing on Denney's bill be delayed at least until tribal officials have a chance to weigh in.

Idaho's tax adds $5.70 to a carton of 10 packs, while the Coeur d'Alene Tribe's tax only boosts the price by $1.00.

At its introduction Feb. 23, Denney told committee members that the measure was drafted by the Idaho attorney general's office specifically not to run afoul of U.S. Supreme Court rulings that protect tribal sovereignty, according to AP.

Denney insisted it's not an effort to boost Idaho tax revenue, since the tribes would be able to claim a tax credit for reservation sales, but a push to make sure off-reservation retailers don't face a disadvantage when state residents head to Indian country to stock up on cheap smokes. Denney does expect that the total number of cigarettes sold on Indian reservations – which was just over 324 million individual cigarettes in fiscal year 2010 – would decrease.

Anti-smoking advocates who plan to introduce a measure later this session to hike Idaho's cigarette tax by $1.25 per pack are so far looking favorably at Denney's legislation. Brent Olmstead, who lobbies for the Campaign for Tobacco-free Kids, said anything that increases the cost of cigarettes – from reservation retailers or those elsewhere – would likely be a disincentive for smokers.

While Denney's measure would certain help level the competitive playing field for convenience stores, it ccould also undercut an argument that convenience stores are certain to employ in their fight against the anti-smoking coalition's proposed $1.25 per pack hike: That such a move would drive more buyers onto Indian reservations, to take advantage of lower prices, according to AP.