NY May Try To Collect Taxes On Indian Cigarettes

MICHAEL GORMLEY

ALBANY, N.Y. (AP) — A deepening deficit has New York officials looking again at how to collect unpaid taxes on cigarettes sold by Indian tribes to non-Indians.

The issue is also making unlikely allies of cigarette makers and anti-smoking interests who say taxation would limit illegal sales and keep cigarettes out of the hands of minors.

A budget hearing Tuesday in Manhattan will weigh the potential revenue against concerns that any attempt to collect the taxes could cause a repeat of sometimes violent confrontations between the state and tribes in the 1990s. The Legislature has pressed for collection before, but past governors have refused, preferring to try to negotiate agreements.

At stake is what lawmakers, cigarette companies and a leading anti-smoking group say is $400 million or more in annual revenue. That disputed figure would be almost equal to a proposed cut in midyear school aid that's intended to help close a $3 billion budget deficit.

For tribes like the Seneca Indian Nation, the taxes could mean an end to fortunes being made from an empire built on Internet sales to individual "smoke shops" on territories like the small Poospatuck Reservation on Long Island. They say the untaxed sales are guaranteed by treaties dating to 1794 that protect them from taxation, and they don't recognize state courts' views that side with the state.