Governor Paterson really has no choice-he must move immediately to enforce the law on the taxation of Indian retailers. As the NY Post editorializes this morning: "Who knew the special interests opposing Gov. Paterson's budget cuts had it so easy? All they need to do to stop the gov dead in his tracks is . . . threaten to sue. That, at least, is the message Paterson is sending with his latest punt over the scandalous flow of illicit cigarettes from New York's Indian reservations - a trade that's costing New York hundreds of millions in lost tax dollars."
With a budget defict in the billions, how does the governor explain to all New Yorkers that he can't collect millions owed to the tax payers because he's afraid of being sued by Indians? Or is it something else that he is afraid of? "Sure, someone will sue if he tries to collect the tax - but bogus lawsuits follow any state action of consequence. Then again, Paterson can't exactly admit the real reason he won't go after the revenue - that he fears more of the Indian violence that followed then-Gov. Pataki's attempt to enforce the tax. Pataki, to his shame, caved in; now Paterson must live with the precedent. But Pataki was wrong, and so is Paterson. How the latter can leave hundreds of millions on the table, given Albany's fiscal condition, is a mystery."
And it's really a very simple collection process-just tax the product at the source, before it even comes into the state: "And the only reason the state is currently barred from enforcing the tax is that the governor ordered his tax agents not to print the vouchers needed to exempt tribal smokers."
All of the constitutional reasons for not taxing Indians were resolved in litigation brought by then AG Oliver Koppell over a decade ago. As the Post points out: "But the Supreme Court ruled more than a decade ago that states have the right to tax cigarettes sold on reservations to non-Indians - tribal nonsense about their "sovereignty" notwithstanding."
This failure is, as we have pointed out countless numbers of times, hurting NY's small businesses and now it's the state's tax payers getting shafted big time-which is why the City of New York (and our client John Catsimatidis)has brought suit against a Long Island tribal tax evader. Not one program should be cut until these taxes are properly collected.