Home The News North East News Fiscal crisis prompts renewed effort to collect cigarette taxes

Fiscal crisis prompts renewed effort to collect cigarette taxes

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Wednesday, 27 January 2010

Fiscal crisis prompts renewed effort to collect cigarette taxes By Cara Matthews January 26, 2010 ALBANY -- As the state's fiscal crisis continues, lawmakers and the governor have renewed their efforts to bring in millions of dollars in uncollected taxes from Indian nations that sell cigarettes to non-Native Americans at smokeshops and over the Internet. The Senate Investigations and Government Operations Committee held its first public hearing on the issue last fall. Since then, Gov. David Paterson has called for lifting the "forbearance" policy of not collecting cigarette taxes from Indian nations and for the state Department of Taxation and Finance to develop regulations for collecting the money. Paterson's budget proposal, which he presented last week, does not include a revenue line for the money that enforcement of the law would bring in, which some lawmakers criticized. "It remains very unclear how the governor's reversal will be implemented and what steps will come next," Sen. Craig Johnson, D-Nassau, committee chairman, said Tuesday at the second public hearing on the cigarette taxes. Johnson said the committee's investigation has been expanded to include the relationship and services the state and Native-American reservations provide to each other. A state police document he distributed claims Native-American casinos owe the agency $55.9 million for fingerprinting and security services provided between 1999 and Dec. 31, 2009. The fees owed are $14.3 million for the Mohawk casino, $22.8 million for the Seneca Niagara casino, $22.8 million for the Seneca Allegany casino, and $739,328 for the Oneida casino for October through December 2009, according to the state police. The Oneida Nation just received the billing statement Tuesday for the last three months of 2009, said Mark Emery, a spokesman for the tribe. The Paterson administration is aware of the issue and will continue negotiations to collect the money, Paterson budget spokesman Matt Anderson said. Senate Finance Committee Chairman Carl Kruger, D-Brooklyn, criticized the governor for not putting a revenue line for cigarette taxes in his budget, and for proposing a new tax on cigarettes -- another $1.00 per pack, to $3.75 -- without first collecting those that are owed. Kruger said industry officials estimate revenue from the collection of taxes on Indian reservations is more than $1 billion, but estimates have ranged from a few hundred thousand dollars to $1.5 billion or $1.6 billion. The money would alleviate the state's fiscal crisis, he said. "That's wrong when we want to take teachers out of the classroom, when we want to close hospitals, when we want to retool government, when we have basically cut down to the bone, rather than the fat, in order to close a $7.4 billion budget gap," he said. Paterson spokesman Morgan Hook said there is no budget line for tax revenues "because there's no possible way of knowing what those revenues will be, and in order to responsibly close a $7.5 billion budget gap, we need to make sure that we're closing that gap with revenues that we know are going to be there." The administration continues to negotiate with Indian nations, and the state Court of Appeals is expected to decide some of the issues surrounding the collection of cigarette taxes from Indian nations soon, said David Rose, assistant counsel to the governor. Indian nations are against collecting taxes for the state, but it may be possible to collect the revenue another way, Rose said. Taxes are imposed at the wholesale level. The process for developing regulations for collecting the cigarette taxes has periods of time built into it, including several months for public comment, Rose said. The Oneida Nation, which gave testimony last fall, thinks the best way to solve these kinds of issues is through government-to-government discussions, Emery said. Requiring the Oneida Nation and others to collect taxes will lead to more litigation, he said. "The state is facing a budgetary crisis and is again looking for Indian nations to become the state's tax collector to solve that crisis," Emery said. In a statement last week, Seneca Nation President Barry Snyder Sr. said New York has no authority over the nation, its lands or commerce that takes place there. A spokesman for the nation could not immediately be reached Tuesday for a comment on the security and fingerprinting fees. James Calvin, president of the state Association of Convenience Stores, said at Tuesday's hearing that the group's members obtain a license, collect and remit taxes, and "their reward is a state tax policy that chases their customers away to unlicensed, unregulated, 'tax free' tribal stores they cannot possibly compete with." Rene Patterson, general manager of Quickway Food Stores in Binghamton, said after the hearing that the stores have lost business to Native-American reservations and also to Pennsylvania. "And, every time the state raises the taxes, we continue to lose more sales to the reservations that sell to non-Native Americans that don't pay the taxes," he said. http://www.stargazette.com/article/20100126/NEWS01/1260357/Fiscal%20crisis%20prompts%20renewed%20effort%20to%20collect%20cigarette%20taxes

 

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