Pataki Wants Indian Tax Collection Delay

Published in CSP Daily News

C-store group takes N.Y. gov to task

ALBANY, N.Y. -- New York Governor George Pataki wants to delay by one year a law requiring Indian stores to collect cigarette and fuel taxes, until after he has left office, a lobbyist for competing stores said on Wednesday, according to a Reuters report.

The state Tax Department, under a law enacted last year, must begin requiring Indian reservation stores to start collecting the taxes on sales to non-Indians on March 1, said James Calvin, president of the New York Association of Convenience Stores, in his legislative testimony.

But the Republican governor, now in the last year of his third four-year term, in his budget recommended delaying the start of these tax collections until March 1, 2007"after he has left office," Calvin said.

A Pataki spokesperson was not immediately available, said Reuters.

The governor in the past has been reluctant to force the issue, said the report. In 1997, 12 New York State troopers were injured at an anti-tax rally outside Buffalo on the stretch of the Thruway that runs through the Cattaraugus reservation.

Calvin estimated that the current loophole was costing the state and the convenience stores, which have to compete with the lower-priced cigarettes and fuel the reservation stores can offer, huge amounts of money. "It's a full-scale tax evasion epidemic that costs licensed retailers $1 billion or more in gross sales each year, and costs our state at least $900 million a year in lost tax revenue, not to mention what local governments lose, or the additional loss of motor fuel taxes," he said.

The longstanding problem has inspired a number of court cases and efforts to resolve it by negotiating compacts with New York's Indian tribes.

Calvin's clients stand to suffer further losses if the legislature enacts Pataki's plan to boost the state's cigarette excise taxes by two-thirds to $2.50 per pack from the current $1.50 level, Calvin said.

The combined state/local cigarette tax in New York City would rise even higher to $3.50 a pack from $3.00, he added.

Calvin referred to these aspects of Pataki's budget plan as: "Two moves certain to drive even more sales to 'untaxed' sources."