In what is viewed as a direct challenge to Tribal sovereignty and trade rights, New York Gov. David Paterson has signed a new law to impose and collect state sales taxes on tobacco products sold to non-Indians on Tribal land. With New York facing a multi-billion dollar budget deficit, revenue officials estimate the state could realize more than $62 million in new tax collections each year from the tobacco trade on reservations.
At the press conference announcing the new law, Gov. Paterson stated:
“We profess great respect for the Indian sovereign nations and we expect to continue to demonstrate that respect for them, and what we are going to do today is try to alleviate an issue that’s existed for a very long time and we won’t be able to alleviate it just today, but we hope we’re taking steps in what will be a process that will reach that goal and that end. With the current financial situation, this tax will help bring extra revenue for the state.”
The new law requires tobacco wholesalers to sign an oath, under penalty of perjury, stating that the cigarettes they sell will not be resold untaxed in violation of state law. A state appeals court enjoined a similar law in 2006 because the state had not developed a coupon system for reservation retailers to claim tax refunds on cigarettes sold to Tribal members. Gov. Paterson stated that the new law is intended to circumvent that particular issue and collect the tax without addressing it.
“Seeing that we can’t get around that encumbrance, (the state) introduced legislation that we will now ask for certification under penalty of law to those wholesalers that sell without collecting taxes. That’s in simple (terms) what the bill does. This is a new approach and we hope this will be an effective approach to solve this problem.”
Business leaders in the Haudenosaunee Confederacy have vowed to collaboratively battle any attempt by New York State to interfere in the Indian tobacco trade. Mark F. Emery, director of media relations in the Oneida Nation Public Affairs Department, stated that the new law will be immediately challenged in court.
“None of the state’s other efforts to infringe on sovereignty have worked, and there is no reason to believe this will work either. If the state is serious about resolving this issue, it will negotiate with Indian nations rather than constantly attacking them.”