In a lawsuit brought by John Catsimatidis against Long Island Indian tribes, the supermarket owner argued that the Indian sales were fraudulent because they were alleged to be "tax free," when in reality no sales from Indians to non-Indians are exempt from New York State taxes. Now, according to the NY Times this morning, a Federal judge has upheld this claim while dismissing others.
Judge Amon's dismissal of the other allegations are indeed questionable: "In a decision rendered on Friday and announced yesterday, Judge Carol Bagley Amon of Federal District Court in Brooklyn dismissed the claim that the non-tax sales “created, fostered and nourished a thriving black market in illegally discounted cigarette sales” and also dismissed charges of corrupt business dealings and unfair competition."
That anyone, let alone a Federal judge, could say with a straight face that the Indian sales don't foster black market activities beggers the imagination-and Judge Amon should speak to the thousands of city bodegas that are being undersold by street dealers whose cigarettes come directly from the Indian source on the Island.
Of course, the impetus behind all of this is the fact that the US Supreme court has ruled that, as far as cigarettes are concerned, Indian sovereignty is irrelevant. The Times' take on this is, however, misleading: "The state sets minimum price levels for retailers and imposes a sales tax of $1.50 a pack. But historically, the state has not collected cigarette taxes from tribes within its borders because they are considered sovereign nations, so Indian-owned smoke shops have long sold cigarettes at far lower prices than non-Indian competitors."
On the contrary, the state has not enforced the law out of sheer pusillanimity-the fear of tribal violence. Then Attorney General Spitzer told us privately, that when he was governor this would all change. It does appear, though, that the more things change, the more they stay the same. As it was reported earlier this year: "As Gov. Eliot Spitzer gave up Wednesday on collecting sales tax on gas and cigarettes from Indian-owned stores, Bob Arnott was preparing to shut down his family-owned business this Saturday."
Mr. Arnott's perspective, as he is forced to shutter his business is telling: "I didn’t believe the governor when he said he was going to collect taxes,” Arnott said. “It’s how we gain traffic from people coming in and buying gas and cigarettes — when you lose cigarettes to customers, you lose everything.” In NYC, however, it is the buttlegging from the reservation that has taken over $200 million a year from legitimate retailers-something that the state and city authorities appear all too comfortable in allowing to continue. Judge, Amon, however, must be smoking something other than tobacco.