Tuesday, September 01, 2009

Smoke Out Tax Indian Cheats

John Wilson of the NY Post-following up on our own call for action-editorializes this morning about the recent court ruling against the illicit cigarette sales by Indian retailers: "CITY lawyers have come up with a novel way around Albany's refusal to enforce state cigarette-tax law on New York's Indian reservations: Ask a federal judge to do the job. It might even work -- to an extent."

That it's even necessary is because New York's governors are cut from a coward's cloth: "Governors from Mario Cuomo to David Paterson have quaked at the idea of cracking down on the tribes' illicit tobacco trade. Last year, according to state Tax Department figures, that trade moved at least 270 million packs of cigarettes off state reservations -- costing state and local governments an estimated billion dollars in lost taxes."

That's billions with a B-and the silly claim by these tax evaders that they somehow have sovereign immunity-when they are glomming tens of millions of dollars in aid for schools and other services-doesn't stand up to even the most cursory legal scrutiny: "Treaties grant Indians the right to tax-free cigarettes smokes for their own use. But Poospatuck retailers bought a whopping 85 million packs of tax-free cigarettes last year -- and fewer than 300 Indians live on the reservation. You do the math."

Make no mistake about it, this enterprise has all of the trappings of a sophisticated criminal operation-except for the fact that the law and order folks are all hiding under their desks: "A 2006 law was supposed to cripple the trade by taxing wholesalers on all cigarettes they sell -- while issuing vouchers to the tribes for the few packs sold to Indians. But then-Gov. George Pataki backed down (presumably for fear of Indian demonstrations like the one that shut down the Thruway in 1997), telling the Tax Department not to issue the vouchers -- which let the tribes go to court and stop the enforcement. And Govs. Spitzer and Paterson have maintained Pataki's policy."

But these legal victories are time consuming-and should be unnecessary if our state leader would simply show some cojones: "Statewide, more than half a dozen major Indian-cigarette-related cases are under way. For example, Amon explicitly disregarded an ill-reasoned recent ruling by a Rochester-based state appeals court, which struck down efforts by Cayuga and Oneida Counties to prosecute Cayuga Indian retailers. Among other head-scratchers, that court found that Gov. Paterson's unwillingness to collect taxes on reservations means that no such taxes even exist. Judge Amon said that she expects the state's highest court to overturn that ruling. But if it doesn't, the city's back to square one. Of course, ultimately, no judicial remedy can take the place of firm executive action."

So we await such action-and it would help if the legislature found some more creative ways to hold Paterson's hands to the fire on this issue. It is a disgrace that a few outlaws are able to hold New York's tax payers and small businesses hostage. For the governor, this should have been a, "Make my day" moment. Eastwood he ain't, however. So someone is gonna have to help him find a backbone-there are a billion reasons for doing just this.