And now:Ish <[EMAIL PROTECTED]> writes:
From: Piercing Eyes <[EMAIL PROTECTED]>
forwarded for informational purposes only..contents have not been verified...
From: [EMAIL PROTECTED]
Date: Sun, 11 Jul 1999 14:06:17 EDT
Subject: Lower Tobacco Prices Help Indians
Lower Tobacco Prices Help Indians
.c The Associated Press
By MICHAEL HILL
CANASTOTA, N.Y. (AP) - When James Case runs out of smokes, his choice is
clear. His brand, Marlboro Lights, costs $27.84 per carton at the Express
Mart. Across the street, at the Sav On convenience store, run by the Oneida
Indian Nation, the price is $25.50.
The Sav On shop, a few feet beyond the reach of New York state's
56-cent-a-pack tax, is one outpost in a nationwide enterprise that began with
small stores on often isolated Indian reservations and grew into a
multimillion dollar business.
The cut-rate tobacco prices that lure local resident Case and a steady stream
of customers through the door are also available on the Internet.
Cyber-retailers with names like ``Peace Pipe'' and ``Tax Free Cigarettes''
offer discounts to any consumer with a modem and a credit card.
Of late, however, their ability to sidestep state taxes that can run as high
as $1 a pack (in Alaska and Hawaii) is drawing the ire of state governments
and tax-paying competitors as tobacco lawsuits force cigarette prices higher.
Arizona misses out on an estimated $16.4 million in unremitted tobacco taxes
each year, Florida $15.9 million and Kansas $1.6 million, according to a
survey last fall by the Federation of Tax Administrators.
States have the right, recognized by the U.S. Supreme Court, to require
Indian nations to collect and remit state taxes on reservation sales of
tobacco and gasoline to outsiders. But because Indian nations are sovereign,
states cannot force them to do that.
``You've got a right without a remedy,'' says Greg Scott, counsel to the
National Association of Convenience Stores.
The association, along with its New York counterpart, is pursuing a lawsuit
trying to compel New York to enforce taxation. The state loses at least $200
million in annual tax revenue from Indian sales of cigarettes and gasoline to
non-Indians, according to David Cherubin, an attorney for the New York
Association of Convenience Stores. He had no breakdown for tobacco only, and
New York was not among the 35 states that responded to the tax
administrators' survey.
A trial-level judge heard arguments in the 3-year-old case in April, and his
ruling is considered imminent.
To collect tobacco taxes, some states make compacts with individual tribes.
As of February, Scott says, he knew of 11 states that had compacts with at
least some tribes within their borders, but Indians in Kansas, Michigan,
Nebraska, New York, Oklahoma, South Dakota and Washington freely sell
cigarettes to non-tribal members without remitting state taxes. Twenty-seven
states have federally recognized Indian nations.
A number of states have been unwilling or unable to reach compacts. In New
York, for instance, sporadic efforts to reach tax agreements with tribes in
the Iroquois confederacy prompted protests that briefly closed an expressway
south of Buffalo in 1992 and, on May 18, 1997, touched off a melee with
troopers in riot gear over a bonfire on an interstate highway near Syracuse.
Many in the confederacy, which includes the Cayugas, Mohawks, Oneidas,
Onondagas, Senecas and Tuscaroras, saw it as a fight not over tax dollars,
but over their sovereignty. Four days after the bonfire, Gov. George Pataki
abandoned compact efforts, saying he respected that sovereignty.
W. Ron Allen, president of the National Congress of American Indians, says
Indian retail businesses have ``gotten pretty well established over the last
five to 10 years'' and growth has slowed. But expansion on the World Wide Web
has been robust.
State Assemblyman Jeffrey Klein says the number of tax-free Web sites set up
just by Seneca retailers in western New York appears to have tripled, from
eight or nine a year ago to a few dozen now.
The Web sites typically tout the retailers' tax-free status and include
prices on dozens of cigarette brands, from Camel and Winston to generics. A
``value brand'' like Prime, which retails for $21.34 per 10-pack carton off
reservation, is offered on the Internet for $16.75 plus $1.50 shipping.
Prices for other off-brand cigarettes can dip below $10.
When prices rise, ``the people call and scream,'' says Michelle Papineau of
the Smoke Signals shop, near Buffalo, N.Y. ``That's usually when a lot more
people jump on the Internet and look for cheaper cigarettes.''
``What we're doing is perfectly legal,'' says Morgan Reid of JR's Smoke Shop
on Seneca land. ``The taxpayer finally gets a break.''
But some states are cracking down on the tax-free retailers. In January,
Washington state Liquor Control Board agents seized 7,000 cartons of
cigarettes from a grocery store on the Yakama reservation. Officials say the
seized cigarettes lacked tax stamps and were being sold over the Internet to
customers in Alaska, where the cigarette tax is $1 a pack.
In April, agents confiscated more than 1,400 cartons of cigarettes from the
Redwolf Smoke Ship on Puyallup Indian land at Tacoma, Wash., saying the owner
had neither a business license nor one to sell tobacco.
In New York, Assemblyman Klein has proposed legislation that would ban
Internet sales unless the retailer pays state taxes. He says he's concerned
not only about lost tax revenue but also about minors buying cigarettes.
Tax-free sale sites almost invariably warn that customers must be at least 18
years old. But Klein said a 17-year-old intern in his office easily ordered
cartons of Marlboros, both online and via a toll-free number.
``She received the cigarettes at her doorstep,'' Klein says. ``No adult had
to sign for it.
AP-NY-07-11-99 1405EDT
Copyright 1999 The Associated Press. The information contained in the AP
news report may not be published, broadcast, rewritten or otherwise
distributed without prior written authority of The Associated Press.
Reprinted under the Fair Use http://www4.law.cornell.edu/uscode/17/107.html
doctrine of international copyright law.
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