Where There’s Smoke, There’s A Stand-Off Over Indian Cigarette Taxes
Legislators debate costs, benefits, racial tensions in collecting reservation money
Wed, 17 Feb 2010 11:59:00
Trying to avoid stoking racial and cultural fires, the Paterson administration has delicately proposed taxing cigarettes sold on Native American reservations to help close the $7 billion deficit.
Though the collection process would take at least six months to begin implementing, no revenue from the proposed tax was included in the executive budget.
That has led some legislators in favor of the tax to say that the governor is simply blowing smoke when it comes to serious commitment to going through with collection.
“We do not need to wait months,” fumed State Sen. Carl Kruger at a recent press conference in lower Manhattan. “The budget is void of one dollar of revenue that could be collected from those taxes. And we have a gaping hole.”
Kruger was joined by Senate Majority Leader Pedro Espada, as well as State Sens. Joe Addabbo, Jeff Klein and Assembly Members Richard Brodsky and José Rivera.
The state’s tribes claim that the proposed new taxes would infringe on their rights as a sovereign nation, violate centuries-old treaties and further decimate the depressed economic reality for many on the reservation. In the 1990s, the last time state officials tried to tax Indian-sold cigarettes, there were a series of skirmishes, complete with burning-tire road blocks. Since then cigarettes sold on reservations remain tax-free.
Harry Wallace, chief of the Unkechaug Nation on Long Island, said that lawmakers rely on over-inflated revenue estimates provided by business groups to make their case for collecting the tax.
“The data that they’re throwing about is intended simply to incite and provoke confrontation,” Wallace said. “The last thing in the world we want is that—because we know when that happens: it’s a dangerous situation for everyone. People get hurt, they feel intimidated.”
Kruger is among those Wallace accuses of grossly inflating the amount of revenue at stake. The Senate Finance Chair says there is over $1 billion a year at stake if officials begin collecting cigarette taxes from Indian retailers.
Kruger said the need to step up enforcement on reservations is especially important in light of Paterson’s proposal to increase the state’s overall tax on cigarettes by $1.50 per pack.
“To add insult to injury, the theory of the day is we should tax further those people who are already paying cigarette taxes,” he said. “We are not going to allow that to happen in the Senate.”
Administration officials agree with Wallace that Kruger’s estimates of over $1 billion-a-year in revenue from taxing Indian-sold cigarettes are wildly off base.
“I would definitely call Senator Kruger’s position on this issue overly simplistic,” said Morgan Hook, upstate press secretary for Paterson. “There’s nothing to indicate that the state would collect even a fifth of that amount of money.”
As recently as last October, administration officials were casting doubts over efforts to collect taxes on cigarette sales on Indian reservations.
“The governor has been advised the costs of law enforcement would offset whatever gains might be achieved by tax collection,” said Peter Kiernan, Paterson’s chief counsel, in testimony to the Senate last October. “And that is without trying to assess the cost of physical injury or the loss of life or possible property damage.”
Administration officials say they are more interested in achieving “price equality” in cigarette prices, which they hope will help nearby non-Indian stores while also encouraging smoking cessation programs. Under such a plan, cigarettes sold by Indians would be set at prices Kiernan said would be “roughly equivalent” to those charged by non-Indian sellers by forcing a minimum price for sales made on reservations. The difference between the actual price and this price floor would then be turned into a revenue stream to fund local economic development project run by the state—though this would not officially be called a tax. Store owners have long complained that customers often choose to buy cigarettes from Indian reservation retailers, where prices are much lower.
Kruger argues that enforcing the tax would not require tax collectors to set foot on tribal land since fees would be collected from the stamping agent at the wholesalers before the cigarettes are even shipped to Indian land. Wholesalers who do not affix the stamp to those products would be prosecuted, Kruger vowed.
“We will hunt them down, we will find them, we will close them down, and we will arrest them,” he thundered.
Kruger’s fervor in pursuing taxes on cigarettes sold on Indian reservations have irked some of his colleagues, who call the Brooklyn pol the “king of the one-shots” for his reliance on temporary revenue generators. But some are more concerned about disturbing the racial and cultural sensitivities surrounding the issue. State Sen. Eric Adams, a Democrat from Brooklyn, said he was concerned that other legislators were stirring up racial tensions through their pursuit of this issue.
“Hidden under this conversation is some serious racial stereotypes and a disrespectful approach to the Indian community,” said Adams, who acknowledged that he was one of the few in the Legislature who opposed taxing Indian sellers. “I don’t know if we want to be in the position of searching cars and putting state troopers in that position. You don’t need cigarette police.”
Adams, a close confidant of Senate Conference Leader John Sampson, said Sampson is interested in bringing members of the Indian tribes to the table to negotiate these and various other issues, so as to avoid further inciting any anger.
A spokesperson for Assembly Speaker Sheldon Silver declined comment on the issue.
But Wallace said that he and other tribal leaders are growing increasingly dismayed by the rhetoric coming from Albany. Wallace, who was born in Queens and worked for years as a lawyer before opening a smoke shop on the Poospatuck reservation on the South Shore of Long Island, said he is tired of cigarette taxes being portrayed as a cure-all for the state’s financial woes.
“I think they’re trying to look to blame someone for the deficit, and we’re an easy target,” Wallace said. “I am so fed up with this political posturing at the expense of the Indian people. Haven’t they done enough?”
Though the collection process would take at least six months to begin implementing, no revenue from the proposed tax was included in the executive budget.
That has led some legislators in favor of the tax to say that the governor is simply blowing smoke when it comes to serious commitment to going through with collection.
“We do not need to wait months,” fumed State Sen. Carl Kruger at a recent press conference in lower Manhattan. “The budget is void of one dollar of revenue that could be collected from those taxes. And we have a gaping hole.”
Kruger was joined by Senate Majority Leader Pedro Espada, as well as State Sens. Joe Addabbo, Jeff Klein and Assembly Members Richard Brodsky and José Rivera.
The state’s tribes claim that the proposed new taxes would infringe on their rights as a sovereign nation, violate centuries-old treaties and further decimate the depressed economic reality for many on the reservation. In the 1990s, the last time state officials tried to tax Indian-sold cigarettes, there were a series of skirmishes, complete with burning-tire road blocks. Since then cigarettes sold on reservations remain tax-free.Harry Wallace, chief of the Unkechaug Nation on Long Island, said that lawmakers rely on over-inflated revenue estimates provided by business groups to make their case for collecting the tax.
“The data that they’re throwing about is intended simply to incite and provoke confrontation,” Wallace said. “The last thing in the world we want is that—because we know when that happens: it’s a dangerous situation for everyone. People get hurt, they feel intimidated.”
Kruger is among those Wallace accuses of grossly inflating the amount of revenue at stake. The Senate Finance Chair says there is over $1 billion a year at stake if officials begin collecting cigarette taxes from Indian retailers.
Kruger said the need to step up enforcement on reservations is especially important in light of Paterson’s proposal to increase the state’s overall tax on cigarettes by $1.50 per pack.
“To add insult to injury, the theory of the day is we should tax further those people who are already paying cigarette taxes,” he said. “We are not going to allow that to happen in the Senate.”
Administration officials agree with Wallace that Kruger’s estimates of over $1 billion-a-year in revenue from taxing Indian-sold cigarettes are wildly off base.
“I would definitely call Senator Kruger’s position on this issue overly simplistic,” said Morgan Hook, upstate press secretary for Paterson. “There’s nothing to indicate that the state would collect even a fifth of that amount of money.”
As recently as last October, administration officials were casting doubts over efforts to collect taxes on cigarette sales on Indian reservations.
“The governor has been advised the costs of law enforcement would offset whatever gains might be achieved by tax collection,” said Peter Kiernan, Paterson’s chief counsel, in testimony to the Senate last October. “And that is without trying to assess the cost of physical injury or the loss of life or possible property damage.”
Administration officials say they are more interested in achieving “price equality” in cigarette prices, which they hope will help nearby non-Indian stores while also encouraging smoking cessation programs. Under such a plan, cigarettes sold by Indians would be set at prices Kiernan said would be “roughly equivalent” to those charged by non-Indian sellers by forcing a minimum price for sales made on reservations. The difference between the actual price and this price floor would then be turned into a revenue stream to fund local economic development project run by the state—though this would not officially be called a tax. Store owners have long complained that customers often choose to buy cigarettes from Indian reservation retailers, where prices are much lower.
Kruger argues that enforcing the tax would not require tax collectors to set foot on tribal land since fees would be collected from the stamping agent at the wholesalers before the cigarettes are even shipped to Indian land. Wholesalers who do not affix the stamp to those products would be prosecuted, Kruger vowed.
“We will hunt them down, we will find them, we will close them down, and we will arrest them,” he thundered.
Kruger’s fervor in pursuing taxes on cigarettes sold on Indian reservations have irked some of his colleagues, who call the Brooklyn pol the “king of the one-shots” for his reliance on temporary revenue generators. But some are more concerned about disturbing the racial and cultural sensitivities surrounding the issue. State Sen. Eric Adams, a Democrat from Brooklyn, said he was concerned that other legislators were stirring up racial tensions through their pursuit of this issue.
“Hidden under this conversation is some serious racial stereotypes and a disrespectful approach to the Indian community,” said Adams, who acknowledged that he was one of the few in the Legislature who opposed taxing Indian sellers. “I don’t know if we want to be in the position of searching cars and putting state troopers in that position. You don’t need cigarette police.”
Adams, a close confidant of Senate Conference Leader John Sampson, said Sampson is interested in bringing members of the Indian tribes to the table to negotiate these and various other issues, so as to avoid further inciting any anger.
A spokesperson for Assembly Speaker Sheldon Silver declined comment on the issue.
But Wallace said that he and other tribal leaders are growing increasingly dismayed by the rhetoric coming from Albany. Wallace, who was born in Queens and worked for years as a lawyer before opening a smoke shop on the Poospatuck reservation on the South Shore of Long Island, said he is tired of cigarette taxes being portrayed as a cure-all for the state’s financial woes.
“I think they’re trying to look to blame someone for the deficit, and we’re an easy target,” Wallace said. “I am so fed up with this political posturing at the expense of the Indian people. Haven’t they done enough?”
