Thursday, November 11, 2010

Federal Judge A Smoking Dope

Federal Judge Richard Arcara has outdone himself once again-ruling that the Indian cigarette sellers are wrong on the law, but still won't enforce his ruling: "A federal judge has sided with New York in the latest ruling in a dispute over the state's plans to tax most Indian reservation smokeshop sales, but collection of the tax is on hold for now. U.S. District Judge Richard Arcara in Buffalo denied a request to block the state from collecting a sales tax on cigarettes sold to non-Indians. But he froze his decision so the two tribes who sought the order can appeal."

Look up pusillanimous in the dictionary-Judge Aracara's picture is right there, and in living color: "Arcara's ruling Tuesday in a case brought by the Unkechaug and St. Regis Mohawk tribes mirrors an earlier decision in a challenge by the Seneca and Cayuga nations. The decisions mean New York still can't start collecting the $4.35-per-pack sales tax until a higher court, the Second Circuit Court of Appeals, hears the issue. It's unknown how long the appeals process will take."

Hey, maybe the Bills can use a new punter-Aracara can sure kick a long ball-and the Indians are free to starve the treasury while gorging themselves on the illegal profits from tax evasion: "The cash-starved state anticipates $200 million a year in revenue from the tax. The tribes argue the regulations would interfere with their rights of tribal sovereignty, make it hard for members to buy tax-free cigarettes and devastate tribal economies that depend on the sale of lower-priced cigarettes to fund programs and services."

All of which makes the new cigarette tax-already approaching the status of negative revenue-untenable and in need of repeal. At least until the enforcement issue is resolved in the courts. Aracara, for his part recognizes that the enforcement of the law could hurt the law breakers-offering this as his rationale for the stay: "In denying a preliminary injunction to the Unkechaugs of Long Island and St. Regis Mohawks of northern New York, Arcara said that, like the Senecas and Cayugas of western New York, the tribes had not demonstrated a likelihood of success on the merits of their claims, a requirement for issuing such an order. But Arcara did acknowledge that the Indian nations would be harmed by the ruling and so issued a stay halting collection of the new tax pending appeal."

Arcara, of course, fails to even recognize that their are tax paying store owners (not to mention the strapped NY taxpayers) who are being unfairly squeezed. But with these buttleggers-and their judicial enablers-"success on the merits" is a meaningless concept. And today we get the news that, what a surprise, cigarette sales-and tax revenues-are plummeting because of the failure to enforce the tax laws. Thank Judge Arcara for abetting the Indian windfall.

The NY Post reports the bad news: "Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found. Law-abiding cigarette dealers have sold an average of 30 million packs of smokes in each of the last four months -- some 11 million fewer than before Gov. Paterson and lawmakers raised the state tax on cigarettes to $4.35 a pack in a scramble to close a massive budget gap."

Shocking, no? Meanwhile the legitimate retailers and wholesalers are sucking wind-with the legislature and the governor-thumbs up their posteriors-refuse to even give the wholesalers a 10 cent handling fee to compensate for their losses. But business is booming elsewhere: "More likely, experts say, sales have simply shifted to nearby tax havens that allow New Yorkers to stockpile cut-rate smokes at the expense of the state treasury. Both Pennsylvania and Vermont, which each have significantly lower cigarette taxes, have seen tobacco sales rise since New York's hike, The Post's analysis found. The Post reported in August that retailers said sales were off by as much as 45 percent in stores bordering low-tax states like Pennsylvania and Vermont, as well as tax-free Indian reservations in western New York and on Long Island."

Of course, all of this was predictable when you raise a tax like this one before enforcement is assured-and NYACS Jim Calvin warned the legislature and the governor that a shortfall would accompany an Indian windfall, but to no avail: "Anecdotal reports suggest sales are booming on in-state Indian reservations, where tribes have so far stymied Paterson's efforts to collect taxes on cigarettes sold to non-Native Americans. "That's what we warned would happen, and obviously it has come to fruition," said James Calvin, of the New York Association of Convenience Stores. "Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating."

As a result of this ineptitude-and Judge Arcara's fecklessness-the state finds itself in a major budget whole: "If the trend continues, the state could fall far short of the $260 million windfall Paterson expected from the 58 percent tax hike. The increase has brought in only $13.8 million a month, according state sales figures, which means the plan could be as much as $136 million in the red by March 31."

So while Arcara smokes the dopey Indian peace pipe, all the rest of us must sit back and watch predicate felons use our tax money to forestall their own prosecution-knowing all the while that they have a judge who will judge not.