Changes in Native American Tax Collection Boost N.Y. C-stores

VERNON, N.Y. -- New York State's victory in its battle to collect cigarette excise taxes from Indian reservations has had an unexpected -- but not unwelcomed -- consequence for area retailers.

In mid-June, the Appellate Division of the State Supreme Court lifted a temporary injunction against the collection of the $4.35-per-pack tax. Immediately following that decision, Robert Odawi Porter, president of the Seneca Nation of Indians, said the tribes would turn to making their own cigarettes, therefore exempting them from the fee, as CSNews Online reported.

For its part, the Oneida Indian Nation let its supply of mainstream brand cigarettes dwindle. But that decision to stop carrying nationally known brands has led adult smokers to turn to local convenience stores and gas stations, according to UticaOD.com.

"I don't like the brands they are selling," Sue Fort, who was buying a pack of USA Gold Lights at FasTrip, a Mobil gas station with a convenience store outside Vernon, told the news outlet. "I won't buy there anymore."

Others are following suit. Paul Badhan, who owns FasTrip, said he started noticing the change about two weeks ago.

"It was hurting us real bad," he said of the Oneida's reservations cigarette selling. "Gas and cigarettes are our main business. We think it's going to be better for us now."

New York state and local municipalities lost millions in tax revenue as Indian tribes grew their retail cigarette business. But state and local governments were not the only ones on the losing side. Gas station and convenience store owners contend sales of gas and other goods declined because smokers often buy other things at the same time they pick up their cigarettes.

"Now, people come in and then we sell a lot more stuff," Badhan said.

James Calvin, president of the New York Association of Convenience Stores, told UticaOD.com the impacts on convenience stores would be positive, but wouldn't completely solve the problem of cheap Indian cigarettes. He said anecdotal evidence across the state shows sales increases in some, but not all non-Indian stores.

"In some cases, the improvement has been significant, but it’s not universal," he said.

Calvin also said many people now are smoking the cheaper Indian-brand cigarettes. "Those products are still being sold in huge quantities at the SavOn stores and other tribal stores in New York," he added.