Indian Cigarette Tax Enforcement: Any Day, Any Day

As City Hall is reporting, there is great skepticism in the state over whether Governor Paterson will actually begin enforcing the law-as per statute-on September the 1st: "Let the collections begin. Really. Maybe. Following through on the Paterson administration’s pledge to collect taxes on tobacco products sold on Indian reservations, the state Department of Taxation and Finance issued a memo Thursday formalizing the process touted the effort as a sign of the governor’s commitment to collecting the tax."

One law maker isn't too sure that the tax revenues will start to pour in as the kids get ready to go back to school: "But some legislators accused Paterson of continuing to blow smoke, not going far enough. “In the end we’re in no better shape then we were before,” said State Sen. Carl Kruger, a vocal proponent for cracking down on unstamped cigarettes sold on Indian reservations. “Rather than taking giant leaps, we’re taking baby steps.”

But while the state takes baby steps, the tax increase waited for no one-and went immediately into effect on the first of July. What this means to local retailers and their tax agent wholesale suppliers is a summer of wind sucking-with more buttlegging and black market activity taking away from their ability to do legitimate business. For the wholesalers who, because of the huge increase in the tax, and owing to the legal obligation that mandates that they have to pay the state up front for tax stamps, this means being out of pocket for tens of millions of additional dollars that they can ill afford in this tax evasion state.

We are hearing that one distributor upstate is being sold-and its 250 local jobs heading for Pennsylvania-while one of the state's largest wholesalers-with an additional 500 jobs-is also discussing a similar sale and move. In the interim, a measure that would give the stamp agents an additional 10 cents a pack for a handling fee remains stalled. For the bodegas, it means watching more and more cigarette sales taking place on the street-often right in front of their own stores.

And the state still meanders along-with Bad Faith Paterson vetoing a chapter amendment that would have required stamps on all packs of cigarettes being sold to the Indian reservations. The Capitol-City Hall's sister publication-details the betrayal: "On July 21, Gov. David Paterson vetoed a chapter amendment submitted by the Legislature that would require all cigarettes sold to Indian nations to bear a tax stamp. The measure also would have reversed the governor’s power to unilaterally negotiate with tribal leaders one on one, without legislative input. The governor was able to force lawmakers to grant him the expanded authority by embedding the provision in the same budget extender bill that raised taxes $1.60 per pack of cigarettes. In vetoing the Legislature’s attempt to take away those powers, Paterson spelled out his position clearly."

Why did the governor do this? The explanation-after 15 years of betrayal-is breathtaking: "Enacting such a measure would have a negative impact on the productive negotiations my administration has been engaged in with the leadership and representatives of the various Indian nations and tribes in New York,” the veto message reads."

In other words, a deal that will once again mean that enforcement will take a back seat to ass kissing the tribes-who, for their part, keep bogarting the pusillanimous governor: "Tribal leaders have also amped up their rhetoric, accusing some in the Legislature of using them as a scapegoat for the state’s budget woes. “We will never capitulate,” said Chief Harry Wallace of the Unkechaug Nation on Long Island. “They’ll have to kill us to compel that kind of capitulation.” Wallace, who operates a smoke shop on the Poospatuck reservation, dismissed accusations that unstamped Indian tobacco products account for much of the cigarette bootlegging in the state, saying a 2007 report showed that most of those unstamped products came from outside the state. “We are taking care of our own,” Wallace said. “Why do they hate us for that? Are we supposed to be in abject poverty, totally dependent on your largesse and your beneficence? Well, excuse my language, but fuck you.”

The question that remains, is whether the frightened governor can take his Depends off long enough to find the intestinal fortitude to respond to this kind of blatant disdain for the authority of the state. History teaches us to be suspect. We'll give Assemblyman Mike Benjamin, speaking to City Hall, the last word: "Assembly Member Michael Benjamin expressed skepticism that the administration will have all the pieces in place necessary to start enforcing the new law with negotiations with between various tribal leaders still ongoing.  “I’ll reserve judgment until we know how the Native Americans are going to respond,” Benjamin said. “They’re going to object to purchasing any kind of cigarettes that already have stamps on them.” He added, “So we have another five weeks to find out.”