N.Y. Cigarette Tax Deal Criticized

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N.Y. Cigarette Tax Deal Criticized

ALBANY, N.Y. -- Anti-smoking advocates and cigarette sellers tried to stop Native American tribes from seeking a competitive advantage created by tax-free tobacco sales on tribal land. At issue is the framework of an agreement announced between Gov. George Pataki and the Mohawks of the St. Regis reservation in northern New York.

The tentative agreement, pending legislative and federal approval, would end land-claim lawsuits as well as approve a casino at the reservation and a new one in the Catskills. But it would also raise tobacco product prices charged by Native American businesses to parity with off-reservation prices, with proceeds going to the tribe. Pataki said the framework could be a model used with other tribes, the Rochester Democrat and Chronicle reported.

"We cannot sit back while state lawmakers plan a tax scheme that attacks our sovereignty," said Seneca President Rickey Armstrong. About 100 Senecas and Mohawks demonstrated against the deal this week in Albany.

"Those who benefit from this unbalanced system are waving the flag of sovereignty," said Dan Finkle, an independent c-store distributor who also heads the Fair Application of Cigarette Taxes (FACT) group, which contends that unregulated sales on reservations promote underage smoking. "This is about economics and leveling the playing field for small businesses and taking the next steps in making it harder for kids to start smoking -- nothing more and nothing less."

By law, Native American sales to Native Americans aren't subject to government sales taxes, but tribal businesses are supposed to collect taxes on sales to non-Indians. That isn't enforced in New York, although the coalition of health and business interests said other states have found effective ways to collect the revenue without violence, the report said.

The Mohawk agreement announced Monday also exempts virtually all current tribal business operators from so-called price parity as long as sales don't exceed $2 million annually over two consecutive years.

FACT said a typical carton of cigarettes costs $47 at a convenience store including all taxes, $18 more than at a reservation store. The result has been a booming business fueled by high state and federal cigarette taxes. FACT claims its research shows New York loses $1.5 billion over two years in tax revenue because of tribal sales.