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Pataki Vetoes Indian Tax Bill

ALBANY, N.Y. -- Gov. George Pataki vetoed a bill Monday that would have required the state to collect taxes on tobacco and gasoline sold by Indian vendors to non-Indians, reported the Associated Press.

The governor said that besides a number of "important" technical flaws, the legislation goes against his policy of trying to get Indian nations to voluntarily pay the taxes, or to make other payments equivalent to the tax liability the tribes would owe. "I believe we can do this through consent, where we can reach agreements with tribal nations," Pataki said.

He cited an agreement announced late last week between the state and the Seneca-Cayuga tribe of Oklahoma in which the Indian nation agreed to collect state taxes. The tribe won the right to establish a casino in the Catskills and settled its share of a land claim with the state.

The legislature in June passed the measure demanding the state start collecting the taxes on Indian sales on Jan. 1, 2005. The bill sought to put into law earlier directives from the legislature for Pataki's Department of Taxation and Finance to create and implement regulations to collect the taxes.

After backing down from attempts to collect the taxes in the late 1990s amid outbreaks of tribal violence, Pataki has avoided a direct confrontation over the issue. Instead, his administration has tried to negotiate settlements with tribes involving land claims, casinos and other issues in which the state seeks extra payments from tribes not collecting sales taxes.

Indian tribes say they are sovereign nations, not subject to state tax codes. Pataki said the bill he vetoed also seemed to give Indian tribes in New York insufficient time to appeal to the federal government, as provided by an 1842 treaty.

Indian vendors won't reveal the volume of their cigarette sales, and estimates by non-Indians of potential revenues to the state vary widely. The state Department of Taxation and Finance said about $60 million a year is going uncollected on Indian tobacco sales to non-Indians, but a group of non-Indian businesses calling itself the Fair Application of Cigarette Taxes said the number is closer to $900 million.

According to NACS, some of its members in New York are being driven out of business because nearby Indian vendors can sell cigarettes far cheaper than non-Indian stores that don't charge the state's $1.50-per-pack tobacco tax.
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