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    Native American Issues Continue

    New Mexico retailers fight tribal gas stations to hold onto fuel sales.

    Gas stations on tribal lands are making motorists happy, but giving convenience store retailers and state officials headaches.

    In New Mexico, the sale of gasoline on Indian lands is exempt from the 17-cents-a-gallon state gasoline tax, although tribes impose a tax of their own. With no land costs and less governmental red tape to contend with, Santo Domingo Pueblo's operation can easily undercut their off-reservation competitors, according to the Associated Press.

    Customers find it worth the wait. Gasoline is $1.45 a gallon for regular and $1.59 for premium at the tribal-owned station - a savings of at least 30 cents a gallon over prices in Santa Fe, 25 miles away.

    State Highway and Transportation Secretary Pete Rahn says his agency is feeling the pinch of the lost revenue, and he worries it will only get worse. "If prices continue to go up, there's going to be even more interest in saving a few pennies," Rahn said.

    Fuel taxes feed the $300 million-plus fund that used to maintain New Mexico's highways. For a variety of reasons growth in the fund is nearly flat. Last year, however, tribes more than 73 million gallons of state tax-exempt gasoline, according to the Taxation and Revenue Department. It's estimated this year's sales could reach 100 million gallons, which would cost the state road fund $13 million, up from about $9.5 million last year, the report said.

    The New Mexico Petroleum Marketers Association isn't happy about the potential impacts of growing tribal gas sales. The consumer won't see the problem "until he runs his car off into a pothole because it can't be fixed," said Ruben Baca, who heads the industry group.

    Tax-free gasoline sales have been a divisive issue in other states. In New York - where a melee between state police and Indian protesters erupted near Syracuse four years ago - it's still unresolved after more than a decade.

    In Iowa, convenience store owners complained recently that the Winnebago Tribe of Nebraska is underselling them. The tribe stopped collecting state taxes - 20 cents in Iowa and 24 cents in Nebraska - at its on-reservation stations, and instead imposed a 3-cent tribal tax.

    While states cannot tax tribal sales to tribal members, they can tax tribal sales to non-members. Doing so, however, is impractical, not to mention politically delicate, the report said. Instead, some states have reached special agreements with tribes under which the tribes get rebates for passing along the state tax at their pumps.

    Wyoming, for example, refunds 14 cents - the amount of the state tax - for every gallon bought by tribal members on the Wind River Reservation. North Carolina uses a complicated rebate formula for the Cherokees based on the number of vehicles owned and miles driven, while in Oklahoma, the state refunds a portion of tax revenue back to tribes for road projects and health, education and public safety programs.

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