By SHARON TURANO
Special to the OBSERVER
Seneca Nation officials will "vigorously oppose" all state efforts to "interfere" with its economy, reports Barry E. Snyder Sr., Seneca Nation president.
His comments come after Gov. David Paterson's office rescinded a state tax department policy to not collect taxes on Indian cigarette sales. Paterson also proposed regulations limiting the amount of tax-free cigarettes that may legally be supplied to Native American nations or tribes.
"These regulations would ensure that an adequate quantity of tax-free cigarettes would be available for purchase for the use of each Indian nation or tribe and for personal consumption by the nation's or tribe's members," Gov. David Paterson said in a news release.
State officials have said previously that collecting taxes on cigarettes sold to non-natives on Indian reservations could net the state at least $1 billion, but nation officials contend such collections violate treaties with the federal government. After numerous stalemates over the years when the issue of tax collection is broached, the new state regulations are designed to "prevent the unlimited flow of tax-free cigarettes to Indian reservation retailers."
"The proposal would serve to address a long-standing issue that has proved problematic for previous administrations and frustrating for local, non-reservation retailers who have not been able to complete sales on a level playing field," reports the press release.
The regulations require cigarette manufacturers sell cigarettes to a licensed stamping agent only. An equation would be used to calculate the amount of tax-free cigarettes that can be sold by agents to each reservation. Licensed agents would be prohibited from selling more of the untaxed cigarettes than they are given. The methodology is based upon "probable demand" of "qualified Indians" on the reservation in addition to the amount needed for official nation or tribal use. For instance, according to the 2000 U.S. Census figures, there are 7,967 Senecas on the Allegany, Cattaraugus and Oil Springs reservations, so the quarterly cigarette amount would be 168,600 - or 21 packs every three months for each enrolled Seneca.
The regulations, which will be publicized March 10, have a 45-day comment period with comments then to be reviewed.
An injunction issued by Judge Rose Sconiers in 2009 prohibits taxes from being collected on cigarette sales to non-Indians on reservations until a mechanism is put in place allowing tax-free sales to Native Americans. The Paterson administration is also appealing that.
Paterson's proposed legislation to clarify tax law and address the injunction is expected to be submitted to the state Legislature soon.
Snyder said, however, the proposed regulations "reflect another illegal attempt by the state to collect taxes on our commerce."
"Instead of trying to destroy our treaty-protected economy, the state should be focused on developing opportunities with us since the nation is a proven contributor to Western New York's regional growth,'' Snyder said. "State officials should realize by now that we are not a scapegoat for Albany's budget problems. It is no secret that Albany is struggling with a budget deficit of historic proportion. That is a problem that comes from decades of overspending and poor resource mismanagement. It is a crisis that the state created for itself."
"The Seneca Nation paid its fair share when we relinquished most of our aboriginal lands to the state and its people hundreds of years ago," he said. "There is no reason the Senecas should be paying the price today, especially when the nation has poured millions into New York state's economy and created thousands of new jobs in Western New York," he said.
Gubernatorial Spokesman Morgan Hook said state officials are approaching the issue in a variety of different ways and still prefer a negotiated settlement on the issue with New York's nation and tribal leaders.
The regulations are available at www.nystax.gov.