Kruger Issues Paterson an Ultimatum on Indian Tax Avoidance

Senator Carl Kruger, who has mysteriously-and mistakenly-been identified as a stalking horse for organized labor by the NY Times, and as a budget cutting ditherer as well for his refusal to go along with the governor's proposed cuts to education and health care, is about to turn the tables on the state's chief executive. He will do so by presenting Paterson with a letter demanding that he rescind the so-called letter of forbearance that had been issued on behalf of New York's Indian cigarette retailers in 2006 by then state tax commissioner Andrew Eristoff.

The ultimatum, part of an emerging challenge to the governor that's focused on all aspects of the state's budget, will throw the gauntlet down to the governor claiming that by this singular act, Paterson can begin to collect around $135,000,000 per month from the tax avoiding Indians. As Kruger's press release says:

"The letter of forbearance, issued by State Tax Commissioner AndrewEristoff in 2006, “is a direct affront to the rule of law,” the Finance Chair said. Sen. Kruger is requesting that the state issue coupons to the Indian tobacco retailers that will enable them to legitimately obtain a rebate for any cigarettes that are sold directly to Indians. These coupons will not apply to sales to those non-Indians who are currently purchasing cigarettes without the requisite tax. Simultaneously, Sen. Kruger is asking the Governor to authorize all of the licensed tobacco tax agents to begin to immediately stamp all cigarettes that are sold in the state. “When New Yorkers are suffering through the worst economic recession over 80 years, and are struggling to pay their own taxes, we simply can’t allow one group to flout the law and refuse to pay the state the taxes that it is owed,” Sen. Kruger said."

As the NY Daily News reports: "The budget battle between Gov. Paterson and Senate Democrats is about to take a nastier turn. Sen. Carl Kruger, a Brooklyn Democrat who leads the Senate Finance Committee, is poised to subpoena the books of state agencies. Kruger also said he is considering asking a judge to force Paterson to collect the $135 million a month he says the state is owed in taxes from the sales of cigarettes on Indian reservations. "Whatever I have to do to protect the interests of the people of this state," Kruger told the Daily News yesterday."

Kruger's stance prompted an uncharacteristically nasty response from the governor's office: "Larry Schwartz, Paterson's top aide, called Kruger a flat-out liar who wants to block the proposed cuts to raise campaign cash from special interests. "Carl Kruger's a liar, his letter is a lie, he owes the governor an apology and this is not helping the process of getting a deficit reduction package," Schwartz said."

For his part, Kruger is planning to include this uncollected tax revenue in his deficit reduction plan. And in our view, for far too long, New Yorkers have watched one group openly flout the laws of the state-with threats of violence underlying this open refusal. While convenience stores bodegas and newsstand operators have watched as their legitimate sales have literally gone up in smoke, our last three governors have prevaricated about what this issue really means-babbling on about treaty rights and the fear of violence when the essence of this fight is simply the rule of law.

But now, with revenues plummeting and taxes on the rise once again, it is simple unconscionable to allow tax cheats to operate illegally in plain sight. Make no mistake about it, we are going to need to really tighten our belts in this state in order to get through this current economic crisis. But sacrifice needs to be shared, and no one group can avoid its responsibilities as taxpaying citizens-especially while it avails itself of our public schools, hospitals and roads.

So if the Times wants to label Kruger an obstructionist, it needs to focus more attention on the real obstacle to a more equitable budget balancing act-the timidity of the accidental governor and his inept minions. Not one dollar of educational money or health care expenditures should even be contemplated until the state insures that all of its citizens pay what they owe.

Update

Welcome Daily Politics readers. Thanks for the link Liz