The risks of levying cigarette taxes on Indian Nations

David A. Paterson, Governor of the New York State has sent a letter to US Department of Justice asking them to assess probably risk when he were to start levying taxes on cigarettes sold in Indian Tribal Nations, including the Seneca Tribe.

In a letter disclosed by the governor’s office to the head of Justice Department, Gov. Peterson also states he could need assistance from the prosecutors in suppressing any probably conflicts with the tribes in case the taxation begins.

Indian cigarettes and taxes

The uncommon letter sent to the New York State Attorneys on September 23 asks for the help of federal government in the probability of unrest and violence if he started collecting taxes on the untaxed Indian cigarettes.

Gov Paterson wrote to attorneys in Syracuse, Buffalo and Brooklyn that he would highly appreciate their help in putting down any social unrest that could happen in any of the districts.

Morgan Hook, a communications manager for the Governor said that they wanted the letter to speak for itself when they composed its text.

The letter was published in The Syracuse News.

Paterson admitted his plan to do his best to reach the agreement with the tribal councils over their permanent denial to tax cigarettes selling in the numerous smoke shops and online stores owned by the local tribes, which reach $1 billion last year.

Meantime, the governor is being pushed by several New York State lawmakers to start enforcing taxation legislation. The officials claim the state coffins lack hundreds of millions each year lost by failing to levy taxes on the tax-free cigarettes sold in Indian reservations.

The NYS is currently facing the largest ever budget deficit, topping $3 billion and legislators are eager to find ways to fill the holes without having to reduce expenses, like on education, earlier proposed by Gov Paterson.

The letter was made public just ten days before the NYS Senate begins hearings on the problem of lost taxes.

According to several confidential sources, the Seneca Nation Council had been previously notified about the governor’s letter to the New York Attorney Kathleen Mehltretter, Benton Campbell, a US Attorney for Brooklyn and Andrew Baxter in Syracuse.

Eric Macias, spokesman for Seneca Nation tribal council said they perceive the letter as the ordinary part of the Governor’s responsibilities fulfilled in order to estimate the aftermaths of what could occur when the state attempts to infringe the Indian sovereignty.

The governor asked the attorneys for their counseling as to probably consequences of the tax collection from cigarettes sold by the Indian nation to non-members of the tribes.

Under the 1994 ruling of the U.S. Supreme Court, the state is empowered to levy taxes on the cigarettes sales to non-Indians.

Paterson mentioned the New York Thruway when the former Governor George Pataki attempted to levy the taxes.

Many governors, from Mario Cuomo and to Paterson, have refraining from settling down the matter with the taxes. The issue has strengthened as the state has dramatically increased tobacco excise taxes in the recent years, contributing to the sharp rise of Indian cigarette sales and subsequent discontent of the remaining part of retailers who stated that tax-free cigarettes undermine competition and hurt sales significantly.

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