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By Julie Sherwood, staff writer
Messenger Post
Posted Jan 21, 2010 @ 05:30 PM
Canandaigua, N.Y. —

A pair of proposed measures at the state and federal levels could create a perfect storm over Native American reservations, driving up the cost of cigarettes.

Gov. David Paterson’s budget proposal calls for the tax department to draft regulations to enforce a 2008 law intended to stop wholesalers from selling untaxed cigarettes to tribes.
Meanwhile, if a bill to be voted on soon in the U.S. Senate passes, buying tax-free cigarettes via mail-order from Native American reservations won’t be an option.


By the Numbers

$2.75
Excise tax on cigarettes

4 percent
State sales tax on cigarettes

$200M
Amount of tax to be gained through reservations





New York’s U.S. senators, Democrats Kirsten Gillibrand and Chuck Schumer, are co-sponsors of Prevent All Cigarette Trafficking (PACT) Act. “It will end illegal trafficking of cigarettes to minors,” said Gillibrand spokeswoman Bethany Lesser.

U.S. Rep. Eric Massa, D-Corning, who voted for the House version of the bill that passed in May, said he supported it for the same reason. Recently, though, he has voiced opposition, saying the Seneca Nation has taken measures to ensure minors can’t buy mail-order cigarettes.
The Senecas “have complied, they have done everything necessary to ensure minors can not buy tobacco,” said Massa. “The overall goal, ... that children can not buy cigarettes online, that has been met.”

Meanwhile, Seneca Nation President Barry Snyder said in a press release the PACT Act would devastate the Seneca’s economy. He said the nation has taken steps to regulate the sale of tobacco products, such as working with the Federal Bureau of Alcohol, Tobacco and Firearms, to implement a cigarette-carton stamping program to enforce the ban on tobacco sales to minors.


Sales tax debate.
Assembly Minority Leader Brian M. Kolb is endorsing Gov. David Paterson’s budget directive requiring the State Department of Taxation and Finance to move forward in collecting sales taxes from purchases made on Native American lands by non-Native Americans.

The governor said Tuesday he would order his tax department to draft regulations to enforce a 2008 law intended to stop wholesalers from selling untaxed cigarettes to tribes.
That would force Indian retailers who currently don’t charge the state’s $2.75-per-pack excise tax and 4 percent sales tax to pay more to suppliers up front and ultimately raise their prices.
The Canandaigua Republican characterized the measure as the “right thing to do” to ensure a “level playing field for all convenience stores.”
“If our laws are to mean anything, they must be applied equally to everyone,” said Kolb in a prepared statement. “No person or group is above the law or below it.”

Paterson’s budget proposal does not yet anticipate any revenue from reservation sales to non-Indians because the regulations are not in place, but supporters of the tax collection plan, including the New York Association of Convenience Stores, estimate the state would raise hundreds of millions of dollars a year.
“The fact that it could generate over $200 million in the collection of state sales taxes on cigarette sales alone is welcome news in light of New York’s multi-billion dollar budget gap that needs closing,” Kolb said.

The Seneca Nation has said it will sit down with the governor to discuss the proposal, but it refuses to collect sales tax for the state.

Retailers weigh in
The state tax on cigarettes, proposed to go up another dollar, has already killed a lot of his sales, said Jeff Bliss, manager of Bliss Shurfine in Manchester. “Most (smokers) are just tiding themselves over to the next time they visit the reservation,” he said, buying “a pack here, a pack there.”
Richard Rank, co-owner of Rank’s IGA in Canandaigua, agreed. Both said the licensing fee they have to pay to sell cigarettes recently rose from $100 to $2,500. Rank questions how much longer he can afford to sell cigarettes.
A ban on mail-order cigarettes “might help sales a little bit,” he said. “But if sales go down the tubes, I will definitely get out of it.”
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