Tribal Tobacco Buyouts

Okla. Legislation pending to terminate tax advantages

Published in CSP Daily News

OKLAHOMA CITY An Oklahoma state senator has filed legislation to allow Gov. Brad Henry to buy out tribal tobacco tax compacts that have given some tribal tobacco shops an advantage over others, according to a report in The Oklahoman.

Sen. Jim Wilson said his measure, Senate Bill 1027, would authorize the governor to enter financial agreements to terminate the compacts. The bill would allow the governor to determine the amount of the buyout and sign new compacts, Wilson said.

Many tribal tobacco stores, especially in [image-nocss] the Tulsa area, are selling packs of cigarettes using a 6-cent tax stamp. Most tribes with new compacts are required to affix stamps of 86 cents. Nontribal stores must use stamps of $1.03 to each pack of cigarettes.

Tobacco stores licensed by the Cherokee and Muscogee (Creek) nations are using the wrong, cheap stamps, state officials said. It's estimated the state is losing about $2.5 million a month because of the practice, according to the treasurer's office.

The tax increase was supposed to generate about $200 million annually for health-care programs. Tax collections have been below expectations since the tax took effect Jan. 1. Critics blame flawed compacts with tribal governments.

"The tribes are also losing a significant amount of revenue which would be used for health care," said Wilson.

Henry said he welcomes any ideas to improve the compacts. "I've not seen the details of Senator Wilson's legislation so I can't comment on that specifically, but I appreciate his efforts and look forward to reviewing that legislation and discussing it with him," Henry said.

Henry said he met earlier in the week with leaders of the Cherokee, Creek and Osage nations to discuss the compliance problem. Another meeting is being scheduled.

If an agreement can't be worked out, the state may have to go into arbitration with the Cherokee and Osage nations and may have to file a federal lawsuit against the Creeks because they have no compact. State officials say tribes without a compact should be affixing 76-cent stamps to each pack of cigarettes sold in tribal stores.