понедельник, 25 июля 2011 г.

Smoke and taxes revisted in N.Y.

tax-free smokes

Add this promising news to the list of what’s different in New York. The days of Indian-owned companies selling tax-free cigarettes on non-Indian land are over.

For that, thank the eagerness of the Cuomo administration to finally collect the tax dollars that a state still on precarious fiscal footing sorely needs.

Over the past month, state and federal agents raided off-reservation tobacco shops and stopped vehicles carrying cigarettes that would be sold at them without collecting state sales taxes. The cigarettes and cigars that were seized are worth some $1.2 million in tax revenue. The Cuomo administration now expects to collect some $27 million in such taxes over the next six months.

That partly settles, then, what’s been a frustrating standoff for years. Yes, people can still go on to Indian reservations and buy tax-free smokes. Yes, that costs the state money. Yet the Cuomo administration can make the very compelling argument that its vigorous tax-collection efforts don’t violate Indian sovereignty.

What is a reassurance to New Yorkers exasperated by years of seeing the state’s finances suffer because of a thriving, illegal cigarette sales operation also serves as an warning to those who make money that way.

“This is the first time we’ve seen enforcement of this nature,” says Lt. Gov. Robert Duffy, who sends clear signals about further enforcement of the tax laws.

How far New York has come. Fourteen years ago, attempts to collect sales taxes erupted in such violent protests that the Pataki administration abandoned them. All the while, negotiations between the state and Indian tribes were futile.

Now, though, the Supreme Court has ruled that states can imposes taxes on tobacco sales to non-Indians. The only caveat is that such taxes can’t fall directly on tribal governments.

Indian tribes are mounting what might well be yet another losing legal argument. They’re making a distinction between cigarettes manufactured by the tribes themselves and those made by the big multinational tobacco companies.

The Oneida Nation, for example, is wise enough not to try to stop tax collections from non-Indian cigarette manufacturers and sellers. Yet it says federal law bans taxation of cigarettes made and sold on a reservation.

The state, meanwhile, is willing to negotiate further on the first point. As for the second, Mr. Duffy reiterates that there are no plans to try to collect taxes on sovereign land.

The state is on secure middle ground here. It’s time to reap all that overdue money.

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