Monday, March 20, 2006

Smoke Signals: Retailer on the Warpath

As we have been reporting the anticipated lawsuit against the Indian retailers selling cigarettes without tax is being filed today. The suit, being brought by Gristede's chairman John Catsimatidis, alleges that the tribes on Long Island helped spawn "a thriving black market of discount cigarette sales." The action seeks an injunction and punitive damages against the Poospatuck and Shinnecock, tribes that aren't recognized by the US government.

The legal action by Gristedes is also designed to force the hand of state government. As the Sun reports this morning, Governor Pataki's office has been dragging its feet on enforcement claiming that enforcement was "premature." Gristede's lawyer Bill Wachtel commented that "Our hope is that in the next month or two, we're going to get the enforcement from the state that we all think is warranted."

Warranted it is, with the state and city losing over $500 million a year and local retailers suffering from unfair competition. It goes without saying that ten years is too long to wait for equity to be achieved and the bleating of the tribes needs to stop. All of this economic activity that is supposed to benefit the tribal members should be thoroughly investigated since, as Wachtel points out, "the lion's share of the money made on reservation cigarette sales is not being used to improve tribal conditions."

The tribes deserve the last word on all of this because they never fail to provide a comical context to what hould be viewed with all seriousness. Harry Wallace, chief of the Unkechaug Nation, takes issue with the Supreme Court ruling that determined that NY State had the right to tax Indian sales to non-Indians: "That's charging people based on ethnic identity, and I refuse to do that."

So now the entire issue of Indian cigarettes is going to come down to a principled fight on the question of racial profiling. You really couldn't make this up.

Update: The State Tax Department ruled recently that a Buffalo wholesaler could ignore state law and resume shipping cigarettes to Native American retailers who weren't paying taxes. Attorney General Spitzer has condemned this move, setting up a showdown with certain tribes assuming he's elected governor.