Oneida Files Lawsuit over New York’s Cigarette Tax

The Oneida Indian Nation filed a lawsuit against New York Gov. David Paterson and the state’s Department of Taxation and Finance yesterday with the Northern District of New York, The Oneida Daily Dispatch reported today. The lawsuit questions the legality of the state’s action to collect tax on tobacco products sold to the tribe and its ability to provide tax-free cigarettes to its members.

Under the state’s current tax law, wholesalers and suppliers would be responsible for paying the state for sales and excise tax on its products, The Oneida Daily Dispatch piece said. The tribe would pay for that tax in the price of cigarettes from the supplier.

In late July, just weeks after New York passed a law that raised the tax on cigarettes to $4.35/pack and made cigarettes sold to non-Indians on reservations taxable, the Oneida announced that it is relocating its western New York cigarette manufacturing plant to a facility in its territory. And just a few days ago, the tribe said it will not buy any cigarettes from suppliers that imbed the state tax.

Last week, a federal judge issued an order barring the state from collecting taxes on cigarettes sold on the Seneca and Cayuga reservations, and the order was extended yesterday.