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ALBANY, N.Y. -- Non-Native American retailers said Monday they are dismayed by the Pataki administration's decision to delay for at least three months collection of state cigarette taxes on Indian vendors' sales to non-Indians, according to a report in the Ithaca Journal.
The state Department of Taxation and Finance's strategy to collect the $1.50-a-pack state tax from wholesalers before they deliver cigarettes to reservation stores is sound and no more discussion of the plan is necessary said Dan Finkle, a leader in the merchant coalition FACT, or "Fair Application of Cigarette Taxes," according to the news report.
"Everyday we wait is another day that the backbones of small businesses come closer to breaking," said Finkle, a Johnstown-based distributor who supplies products to about 2,000 upstate businesses, the newspaper reported.
The tax collections were supposed to begin Dec. 1. The administration's decision will put it off until at least March 1. Gov. George Pataki's tax department said it needs more time to study the issue. Indians have argued that the tax collections violate their sovereignty. In announcing the delay last Friday, the Pataki administration said the "complexity and importance" of the tax collections made a delay necessary, according to the Ithaca Journal.
Pataki backed off an earlier attempt to collect the taxes, in 1997, after violence broke out on some Indian land. Last week, Seneca Nation leaders said they did not condone violence but could not guarantee it wouldn't happen again, the news report stated.
"We've been asked to wait for a solution to this terrible problem," Finkle said. "I am not a patient man. ... We have a solution. So what are we waiting for?"
FACT represents non-Indian merchants who say they cannot compete with nearby Indian vendors who sell cigarettes more cheaply because they don't charge state taxes. An economic study commissioned by the non-Indian coalition estimated that the state lost $1.5 billion in 2001 and 2002 by non-collection of taxes on Indian cigarette sales to non-Indian customers, the Ithaca Journal reported.
James Calvin, president of the state Association of Convenience Stores, was quoted in the Ithaca Journal as saying the "rampant, state-sanctioned tax evasion" represented by Indian cigarette sales is "eroding our customer base, diminishing our bottom line."
"Those who enjoy the rewards of doing business with New Yorkers bear a responsibility to abide by duly enacted standards governing such commerce -- including collecting and remitting applicable taxes," Calvin said, according to the news source.