Monday, August 30, 2010

Will David Paterson Man Up?

In two days, the so-called D-Day for cigarette tax enforcement will be upon us, and the lingering question for those of us who have been on the front lines of this particular war is; Will David Paterson stand up for the law? The NY Daily News certainly hopes so, and on Saturday encouraged the governor to stand firm against the criminal tax evasion enterprises being run out of the Indian reservations: "Gov. Paterson is vowing to launch a long-overdue drive on Wednesday to collect legally owed taxes from Indian cigarette dealers. He must hang tough, and he must succeed. For decades, New York officials have shamefully stood by as scofflaws operating under the cover of Native American sovereignty have openly and aggressively sold millions upon millions of tax-free smokes.This rampant broad-daylight tax-dodging has cost the state billions in revenue, thwarted anti-tobacco campaigns, cheated law-abiding retailers and undermined respect for basic law and order."

And the governor seems to get the fact that this tax evasion empire has crippled the legitimate small businesses-particularly upstate. As he said over the weekend (via Liz): “It’s one of the reasons that so many small businesses have been unable to run, and it’s not fair to them. So, as New Yorkers I would think that they would respect their neighbors who are trying to run businesses.” One of the reasons – not the major reason – but one of the reasons the upstate economy is in such dire straits is because the businesses have not been able to compete freely not just in the sale of cigarettes but also in the sale of gasoline.”

But if the governor holds steady, than the only thing left to worry about here-at least in the short term-is the federal injunction being sought to prevent the state from enforcing the law. So far, the judge in the matter has reserved judgment: "After hearing arguments for over three hours Friday, Judge Richard Arcara said he will reserve his decision on the issue of New York State tax collection from the sale of cigarettes to non-Indians on reservations."

But this should be a no-brainer; it is established law as the News reminds us: "Tribal leaders who claim to be exercising rights under centuries-old treaties are blowing smoke. Lawsuits argued all the way to the Supreme Court have established that Indian retailers may sell tax-free merchandise only to other Indians, not to the general public."

Interestingly enough, the local TV station that ran the story, also provided us with the following "independent" poll: "Nearly seven out of every 10 New Yorkers support Indian nation treaties that offer protection against collecting taxes on Native American-sold goods.The poll, conducted during the week of Aug. 23 by Zogby International, was commissioned by the Seneca Nation of Indians. The results show that of the 702 survey respondents, 68.4 percent believe New York should honor all existing Indian treaties."

Wonder if good old Zogby told the polled folks that they were being ripped off to the tune of well over a $1 billion a year? Or that the Supreme Court had already weighed in on all of this-and not in the Indians' favor? But we're sure that the poll never mentioned that, when confronted with enforcement in the late nineties, the Indians rioted. As the Daily News tells us-in  an admonition to Paterson to not get weak-kneed: "The last serious attempt at tax collection provoked violent resistance as Senecas blockaded a 30-mile stretch of the Thruway near Buffalo and scuffled with state police. Then-Gov. George Pataki backed down. Paterson casts the current threat in dire terms, raising the possibility of "violence and death," even as tribal leaders disavow such tactics. But his knees must not buckle. Because the consequence of nonenforcement is that New York has become an international mecca for illicit cigarette sales."

So, we await the Wednesday commencement of an action that has been put off for the better part of two decades-and in the interim we have lost hundreds of wholesalers and thousands of gas station and convenience store operators; not to mention billions in lost tax revenues. We'll give the News the last word: "Paterson has the option of negotiating alternate settlements with the tribes, but he should reject concessions that cost taxpayers money. Come Wednesday - at long last - Indian shops must obey the law, pay their full share of taxes - or go out of business."