Tuesday, September 30, 2008

Bloomberg and Buttheads

We were extremely pleased this morning to read that Mayor Mike has finally decided to take strong legal action against Indian cigarette dealers. As Newsday reports: "After banning smoking in bars and restaurants, Mayor Michael Bloomberg is now targeting eight Mastic smoke shops, filing a lawsuit yesterday against the retailers on the Poospatuck Indian reservation, claiming they are unlawfully selling untaxed cigarettes.The shops can sell the cigarettes tax-free to reservation residents but not to others, New York City officials said. New York City said the illegal untaxed cigarettes sold at the shops means at least $525 million lost in state tax revenue each year, while the city loses $195 million from city residents making purchases there.
Bootleggers buying and then reselling the tax-free cigarettes from reservations statewide costs taxpayers more than $1 billion annually, city officials said."

Now this is an issue we have been hammering away on for over a decade, and the city's lawsuit follows the one brought by Red Apple Company's CEO John Catsimatidis. As Newsday points out: "The city's lawsuit isn't the only legal challenge to Long Island tribes over cigarette taxes. In 2006 Gristede's Foods Inc. of Manhattan sued the Poospatuck Smoke Shop and Trading Post, the Shinnecock Tribe and Unkechauga Nation in federal court in Brooklyn over allegations that the sale of untaxed cigarettes to non-tribe members had created a black market in illegally discounted cigarette sales."

During the current economic meltdown, it is all hands on deck time. This means that the city and the state can ill afford to disregard these tax scofflaws-no matter what specious arguments they may raise. All eyes are on Governor Paterson who has been exhibiting a case of cold feet on the issue: "Errol Cockfield, a spokesman for Paterson, said the governor will, in coming weeks, meet with leaders of the various Indian tribes and hopes to "reach a resolution to preclude the need for more endless litigation."

Which is, of course, both disingenuous and fruitless. There's no need for any further discussion-and if there's to be "endless litigation," than let it occur after the state enforces the law and the aggrieved Indians file suit. Bloomberg gets this exactly right: "I think the governor should go to the reservations, and say as of tomorrow morning, stop this practice," Bloomberg said. "I think he can make this decision and I'm urging him to do so." Bloomberg said he spoke with Paterson, who he said told him that "he would look into it."

Today's NY Times story is somewhat behind the curve on this issue: "The latest move seeks to go after cigarette retailers, but it could also entangle issues of Indian sovereignty, said Kathryn R. L. Rand, a law professor at the University of North Dakota who is an expert on Indian gambling. “It has legal merit, but I think it’s pushing the envelope a little bit,” she said."

Simply untrue. The issue was resolved over a decade ago when the US Supreme Court ruled, in a unanimous decision, that New York had the right to tax this off-reservation sales; and kudos to then NYS AG Oliver Koppell who successfully brought the action on the state's behalf.

Now we need all of our elected officials to act in concert on this-and collect the money that is going directly into this black market. The time for discussion has long past, and it's a Jerry McGuire moment for the Poospatuck: "Show us the money!"