Senate smoke tax hearing Oct. 27
Hearing will be shown live online

Sunday, October 4, 2009 12:11 AM CDT

WATERLOO — A delegation from Seneca County will testify at an Oct. 27 hearing on the state’s refusal to collect sales tax from cigarettes sold by Indian-run stores to non-Indians.

The four-hour hearing will be conducted by the state Senate’s Standing Committee on Invest­igations & Government Operations. It’s scheduled for 10:30 a.m. Oct. 27 at Manhattan Community College, 199 Chambers St., New York City.

The hearing will be run by state Sen. Craig M. Johnson, D-7, of Nassau. Johnson’s office said the Seneca County officials were invited to testify.

Those not invited can fill out a form and ask to testify if there is time. Written testimony will also be accepted.

“We definitely plan to go. It’s an important issue,” said David Dresser, D-Ovid, chairman of the Seneca County Board of Supervisors Indian Affairs Committee. “We’ll start to plan our testimony so we can make all of our points in the time allowed.”

He said he will also encourage Cayuga County officials to get involved.

Representatives of the Cayuga and Oneida Indian nations are also expected to testify.

Seneca and Cayuga counties are involved in litigation over the cigarette tax issue.

The two counties coordinated a raid and seizure of untaxed cigarettes Nov. 25 at the Cayuga Indian Nation’s convenience stores in Seneca Falls and Union Springs.

A State Supreme Court Judge upheld the raid and seizure. But the Cayugas appealed to the Fourth Department Appellate Division Court, which overturned the lower court’s ruling.

The two counties are now seeking the appellate court’s permission to appeal the matter to the state Court of Appeals. A decision on that request may be issued today.

“The failure to secure this badly needed revenue continues as other states, most recently Florida, have been able to reach tax collection agreements with their local Native American nations,” Johnson said in a statement issued Thursday. “This committee wants to be helpful in crafting a solution to this problem, but first we and the public need to be apprised of where the state and nations stand.”

The issue is of importance in New York City, which has gone to court to challenge the sale of untaxed cigarettes from the Poospatuck Tribe reservation on Long Island.

According to the state Office of the Budget, the failure to collect the sales tax on cigarettes sold by tribes this year is costing the state $65 million in revenue.

The courts affirmed the state’s right to collect taxes on cigarettes sold by Native Americans to non-Native Americans at licensed smoke shops and over the Internet.

But the state Department of Taxation and Finance has not taken steps to collect the tax, including the issuance of coupons to Indians.

Last year, the governor signed a law requiring the taxes to be collected, but that still has not been done.

Johnson said there is also concern that the current situation has made it easier for criminal activities, such as bootlegging and the sale of counterfeit cigarettes, to flourish.

Recently, the U.S. Attorney for the Eastern District of New York pursued suspected cigarette smugglers associated with the Poospatuck Tribe. This network’s alleged ringleader, Rodney Morrison, is facing criminal charges in federal court.

The hearing will be streamed live on the Senate Web site at