Thursday, June 24, 2010

NY Cigarette Tax Legislation Approved — Will Tribes Negotiate, Sue or Protest?

If the state of New York thinks collecting $150 million in revenue from the new tax imposed on cigarettes sold on Indian reservations is a sure thing, it could be in for a surprise.

The new law, approved on Monday, makes cigarettes sold on reservations to non-Indians taxable. It also increased the per/pack tax by $1.60, bringing the total per/pack tax statewide to over $5.00, and upped the tax on all other tobacco products to 75 percent of the retail price. The law goes into effect on Sept. 1.

The governor's office has the power to negotiate tax-collection plans directly with the tribal leaders, according to a story published by WGRZ-TV in Buffalo on June 23, and at least one tribe, the Oneida, appears willing to negotiate.

Although tribal leaders don’t want to take the state to court, failure to negotiate an agreement that works for both sides may leave them no choice.

There is always the chance too that tribal people could react as they did when the state tried to enforce such a tax in 1997: with protests.

"The big unknown is how the people on the reservations will react," Robert Batson, a lawyer-in-residence at Albany Law School's Government Law Center, told WGRZ. "It's a matter of whether they'll react like they did 13 years ago or if they'll accept it or if they make another legal challenge."

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