Wednesday, September 15, 2010

Indians Court Setback

A state Appellate Court has knocked out the preliminary injunction against the state's effort to collect taxes against Indian scofflaws. As the Buffalo News reports: "In Rochester, a state appeals court lifted a temporary order blocking the state from collecting taxes on cigarettes sold by Native American stores to non-Indian customers. On Sept. 1, Appellate Judge Samuel L. Green restored a restraining order that barred the state from collecting the $4.35-per-pack tax. But the court's five-judge panel, which took up the case last week, ruled on Tuesday that the state properly approved regulations for the levy."

The Indians will undoubtedly appeal the decision, but we're still waiting for action on the federal stay as well: "In Buffalo's federal court, District Richard J. Arcara agreed to extend his temporary restraining order barring the state from collecting cigarette taxes from businesses run by Seneca Nation and Cayuga Nation members. The judge extended his order until Sept. 28, as lawyers from the two Indian tribes and the State Attorney General's office continued their dispute in his courtroom. Arcara heard several hours of legal arguments in the case on Tuesday and will hear more today."

But the Senecas are still sticking to their, "sovereign nation," scam: "During Tuesday's proceedings, he heard testimony from Robert Odawi Porter, a lawyer and senior policy adviser to the Senecas. Porter and other witnesses spoke about the Senecas' own procedures for regulating cigarette sales on their reservations. Under an import-export program set up by the tribe four years ago, the Senecas collect 7.5 cents in "fees" for each pack of cigarettes sold by tribal businesses, Porter said. "We do not collect taxes. We call these collections fees," Porter said. "We have collected $45 million in the past four years, and those funds are used for health and education programs for all the Seneca people."

Sure, but how about reimbursing the tax payers for all of the, "fees," that are sent to tribal members for health and educational benefits that accrue to them by virtue, we guess, of the fact that they are considered citizens of this country-turning the courtroom rigmarole  about import-export fess into a farce.

But the real issue is how this tax avoidance has ripped off both the tax paters and small business. The cat's let out of the bag by this observation in the NY Post: "Tribal leaders say the $4.35-per-pack tax would blunt their competitive edge over off-reservation sellers and devastate their economies." Yeah, it sucks when you have to follow the tax laws.

So, in our view, it's simply a matter of time before the legal logjam is cleared-and the state gets the green light to enforce its law; but the threat of violence is still hanging in the air: "The tax tussle has raised tension on reservations. The last time the state tried to collect the tax, in 1997, protesters lit tire fires and shut down a 30-mile stretch of the New York state Thruway that bisects Seneca land near the Pennsylvania line."

With the state budget in free fall-and a current $200 million gap remaining from these judicial stays-the need to enforce the law remains compelling. We'll give the Post the last word: "State lawmakers facing a $9.2 billion budget deficit in June voted to start collecting the sales tax by requiring cigarette wholesalers to prepay the sales taxes before supplying reservation stores. Wholesalers would pass along the levy to tribal retailers." Now let's just do it!