Making Reservations-and Sticking it to the Tax Payers

As the NY Post editorialized yesterday, the proliferation of illegal Indian retail operations continues-along with a feckless government's refusal to take remedial action: "You may have missed it, but New York got a brand-new Indian reservation this month -- consisting entirely of two Upstate convenience stores. A state appellate court ruled that the outlets, owned and operated by the Cayuga Indian tribe on nonreservation land, count as a "qualified reservation" for taxing purposes, thus voiding local efforts to halt the Cayugas' illicit tobacco trade."

And this continued flouting of the law has been consequences for NY's tax payers-and state government that is bleeding red ink: "Cayuga County DA Jon Budelmann, who's moving to appeal the decision, says the two stores channel more than 6 million packs of untaxed cigs a year from the much larger Oneida reservation nearby. Yet fully 275 million packs of cigarettes flowed through New York's Indian reservations last year, depriving state and local governments of an estimated billion dollars in tax revenue -- and pushing law-abiding merchants out of business."

As if small retailers weren't hurting enough! But it's government inaction on this that really gets our blood boiling-as tax payers are hit with more levies to balance a budget whose revenues continue to sink. You'd think that the governor-the main obstacle to enforcement-would prefer to go after tax avoiders, rather than increase taxes on the state's law abiding folks. But, if you did think this fairly logical thought, you would be way wrong.

The governor is apparently afraid of his own shadow-and allows the illegality to flourish even after all of the court rulings that permit the state to tax tobacco sales from Indians to non-Indians: "The tribes argue, contrary to both state law and settled Supreme Court precedent, that such extracurricular commerce is fully within their sovereign treaty rights -- and, thus far, a weak executive and skittish judiciary have let them get away with it."

And what's even worse, is that the Indians are claiming sovereign immunity while continuing to-in adding insult to injury fashion-lap up all manner of government subsidy: "But it would be easier to take their claims to nationhood, and tax exemption, more seriously if they weren't already reliant on nontribal taxpayer dollars. Indeed, New York's Indian tribes have all the entitlements of regular state citizenship -- schools, roads, etc. -- except where those programs are superseded by even more generous federal handouts. The federal Indian Health Service, for instance, oversees a broad range of health grants and benefits on top of Medicare and Medicaid.
Federally recognized tribes can also qualify to receive welfare money directly from Washington."

So, let's get some action here. A billion dollars is still a great deal of money for this cash-strapped state. The only thing standing in the way is the pusillanimity of the acting governor.