New N.Y. Gov. Vows to Collect Cigarette Taxes from Native American-owned C-Stores

ALBANY, N.Y. -- New York state governor Eliot Spitzer has been vocal recently on his plans to collect sales tax from cigarettes sold to non-Native Americans at Native American-owned convenience stores, but retailers in the area remain skeptical on its enforcement, according to a report in the Observer-Dispatch.

The issue has had local retailers and associations in arms since the law was set to go into effect in March 2006. NYACS petitioned for its enforcement, even bringing a lawsuit against state authorities involved, which was ultimately dismissed. Democratic Spitzer is taking an opposite approach from former Republican governor, George Pataki, who did not collect taxes from sales to non-Native American customers at Native American-owned stores. Spitzer's plan would apply to tobacco sales on all Native American land in the state, the Buffalo News reported.

"As I said before, in a measured and thoughtful way, I believe in both a level playing field with respect to competition in the marketplace in terms of sales of the product at issue and also believe in appropriate respect for the sovereign nations," Spitzer said during a press conference last week. "But I believe the statute passed several years ago is an appropriate statute, so we will be moving forward."

A preliminary injunction was issued against the law's enforcement by New York Supreme Court Justice Rose Sconiers. The suit was brought by Scott Maybee, a Seneca tobacco merchant and a Day Wholesale, a northern New York cigarette wholesaler, who wanted to stop Spitzer, the state's attorney general at the time, from enforcing the law that took effect March 1 but was not enforced.

Maybee argued that the tax department failed to carry out part of the law's requirements, and in doing so, made the law unenforceable, and Sconiers agreed.

Spitzer stated that the injunction can be thrown out if the state enacts all the requirements. "My understanding is that [Sconier's] decision -- and this is not said with any disrespect to the judge who issued the decision -- can be rendered moot by tax and finance taking certain steps to effectuate the statute, and if that is done, then the reasoning behind the opinion would be rendered moot," Spitzer said.

The tax collection is mentioned in Spitzer's 2007 budget plan, where he referenced the issue in terms of expected revenue when the law is enforced, the Buffalo News reported.

"We found it encouraging. Spitzer as attorney general had a very strong and clear policy concerning the question of the taxes; that the taxes should be enforced and provide a level playing field," Jim Calvin, president of NYACS, told CSNews Online. "Hopefully that the policy will continue in his new role as governor, and we look forward to the resolution of the issue."

Native American stores, however, believe that enforcing the law would infringe on their sovereignty, the report stated. The state has attempted to collect the taxes a decade ago during Pataki's governance, but it resulted in a blockade of the state thruway near Buffalo, N.Y.

"The circumstances are very different than in '97. First, there is a state law on the books requiring the collection of the taxes," Calvin said. "Second, a number of [Native Americans] operate casinos and hold gambling agreements that are generating hundreds of millions in revenue for the tribes; and third, the public tolerance for violence as a tool for trying to influence governmental policy is much lower in the post-9/11 era."

Some retailers are decidedly doubtful about the law's enforcement. "We've heard that before, so we'll believe it when we see it," Fran Duskiewicz, senior executive vice president of Canastota, N.Y.-based Nice N Easy Grocery Shoppes, told the Observer-Dispatch. Duskiewicz added that in areas where Nice N Easy stores compete with Native American-retailers, business suffers.

Native American stores can sell cigarette cartons for as much as $30 under what non-Native American retailers must sell at to cover tax expenses, Duskiewicz told the paper.

"I would say that I would hope that would come to fruition, because it would put all of us back on a level playing field," said Taberg, N.Y. Nice N Easy store owner Karen Newton.
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