Facing a loss of about $30 million a week in lost revenue, is a prospect that should we out a doubt concentrate one's mind-particularly if you're the governor of a state that's facing a $7 billion fiscal hole. Yet, we're not seeing any sense of urgency from David Paterson over the collection of Indian cigarette money, which was the theme of our well attended press conference yesterday.
One reporter's question stood out: "Why hasn't the governor put any money into the budget for the Indian tax revenue?" To which Senator Kruger responded, "That's a really good question." And it's the reason why the legislators came out yesterday-to show solidarity with the beleaguered business and health groups-and to demonstrate that they will be holding the governor's feet to the fire on this issue.
As the NY Daily News reports: "State Senate Democrats lit a fire under Gov. Paterson Thursday to collect taxes from cigarettes sold on Indian reservations. The group argued that bootleg cigarettes bought at Indian reservations and sold on the street at a steep discount cost city bodegas, grocery stores and newstands $250 million a year in lost business - and $30 million a week in lost state tax revenue."
And Kruger, for one, came out firing-raising questions about the viability of the governor's proposed tax increase: "Sen. Carl Kruger (D-Brooklyn), chairman of the Senate Finance Committee, hinted that he would oppose Paterson's effort to raise the state's current $2.75-per-pack cigarette tax by another $1 unless there is demonstrable action on collecting the taxes from reservation brokers. "Right now, I think it would be hypocritical to support a tax increase on already taxed cigarettes while we show a blind eye to the untaxed cigarettes," Kruger said."
With the state in a deep fiscal hole-and small stores getting the shaft ("The bodega, grocery store owners and newsstand operators estimate that more than half the cigarettes sold in the city are bootleg cigarettes sold at such a discount.") the time for foot dragging should be at an end: "Sen. Pedro Espada (D-Bronx) demonstrated the scam Thursday by having an aide buy two packs of Newports outside his district office on Webster Ave. for $10. "Why would you go and buy in a store?" he asked. Paterson last week said he was going to force Indian dealers to pay the taxes. However, he did not include the new tax revenue in the current fiscal year budget, leading some to believe that he would not immediately enforce the tax."
Senator Jeff Klein, a strong advocate on this issue for years, took offense at the so-called rioter's veto that has apparently stymied three governor's for the past fifteen years: "Efforts to collect taxes from cigarettes sold to non-Indians through reservations have been stalled for decades because governors have been concerned with possible violence. Several collection efforts in the 1990s resulted in blockades of highways upstate by the Seneca Tribe of Western New York. Sen. Jeff Klein (D-Bronx/Westchester) said that everyone has an obligation to obey tax laws, adding, "It's disingenuous of the native-American side to constantly say every time we meet with them and every time this issue is raised that they're going to threaten violence."
The ball is now in the court of the legislature, and it appears that the state senate will be making this collection issue a chip in their deficit reduction bargaining-with Kruger, Klein, Espada and Senator Joe Addabbo playing the Cuba Gooding role to the governor's Jerry McGuire: "Show me the money!"