Non-collection of Indian tobacco taxes will spark Senate hearingsAugust 20, 2009 at 6:06 pm by Rick Karlin In the latest example of how not even Democrats are cozying up to Gov. David Paterson these days, Craig Johnson, the Long Island Democrat who heads the Senate Investigations Committe, wants hearings on the lack of tax collections.
This comes in the wake of a story earlier this week in the Buffalo News noting that Paterson has quietly written off the estimated $65 million it could have gotten by taxing Native American cigarette sales.
Republican Sen. Joe Griffo of the Utica area also decried the lack of tax collection in a recent release.
Here’s Johnson’s statement on the upcoming hearings, followed by Griffo’s release.
Senator Craig M. Johnson, chairman of the Senate Standing Committee on Investigations and Government Operations, announced today plans to hold a hearing on the state’s long-unsuccessful attempts to collect taxes from cigarettes sold to Non-Native Americans on Indian reservations.
This move was prompted by news that the Paterson Administration has quietly written off collecting this revenue — a move that is in direct violation of a law that the governor himself signed last year. The failure to collect this revenue is costing the state $65 million this year, according to the state Office of the Budget.
Non-collection of this tax revenue from Native American retailers has long been an issue in New York that has confounded several administrations. Senator Johnson, however, contends that the current economic crisis, and budget deficit, make a resolution vital.
“We literally can’t afford to look the other way, nor should the state Department of Taxation and Finance ignore a law that is barely a year old,” Senator Johnson, (D-Nassau,) said. “This Committee wants to be helpful in finding a solution, but the public also deserves to know where things stand between the state and Native American retailers and why there has yet to be an agreement.”
Other states – most recently Florida – have been able to reach tax collection agreements with their local Indian nations on this issue.
Senator Johnson was joined in this call for a hearing by fellow committee members Deputy Majority Leader Jeff Klein, (D-Bronx/ Westchester,) and Senator T. William Stachowski, (D-Lake View.) Both senators sponsor legislation that would stem the sale of tax-free cigarettes and further strengthen enforcement of current laws.
“Our state has already lost hundreds of millions of dollars by not cracking down on Native American cigarette retailers. It’s time to stop losing money and start collecting it,” said Deputy Majority Leader Klein. “I believe a public hearing is the next logical step and the best way to find a solution to this problem.”
“I absolutely agree with calling for a public hearing on the issue of collecting state taxes on sales made on native territories,” Senator Stachowski said. “Governor Paterson has repeated time and time again that we are faced with a financial deficit of record proportions. The Supreme Court of the United States has ruled that the collection of taxes is legal on Indian lands, so why would we not pursue this?”
The hearing will take place in Albany this Fall. It will be set pending scheduling and the date of the Governor’s expected special session.
Senator Joseph A. Griffo (R,C, I- Rome) today condemned the Executive’s action to end efforts to collect sales taxes on cigarette sales to non-Indians at Indian-owned businesses.
“This is wrong on multiple levels,” Griffo said. “First and foremost, the tax should be collected. The law of this state says sales of tobacco products to non-Indians should be subject to sales tax. “I don’t know how the Administration can pick and choose which laws they want enforced. Existing law is intended to be abided by, not to be negotiated. I can’t imagine what would happen to employers that went 14 years without obeying the law. We can’t just ignore the law. If the Administration thinks the law is wrong, the redress open to him is to go through the political process to enact a new law, not to simply give up on making the law work.”
Griffo also noted disappointment with the Governor’s inconsistency. “Last year, the governor signed a bill to collect the taxes. This year, he says he will not work to collect the taxes. This is another example of the inconsistent leadership that has governed by stops and starts. How can we move this state forward when in instance after instance, we keep flopping back and forth or going in circles?”
Griffo said the tax is not a Native American issue. “The rise of the Oneida Indian Nation from poverty to prosperity is a great chapter in their history and the history of our region. The real issue in this case is the fiscal impact local residents face from the loss of tax revenue in cigarette sales purchased by non-Indians. ”
Griffo noted that according to some estimates, New York fails to collect $400 million a year in sales taxes on cigarette sales to non-Indians at Indian-owned businesses. “What this can mean to the state, and also to the local communities in Oneida County that should have been sharing in this money for 14 years, is very important given our current fiscal crisis,” Griffo said. “This is also a very important issue for the small convenience stores located near Indian-owned businesses. There should be a level playing field for them in which to compete.”