Patterson Says He Wants to Collect Cigarette Taxes From Tribes

But fearing "violence and civil unrest," N.Y. gov seeks federal help

Published in CSP Daily News

ALBANY, N.Y.-- New York Governor David A. Paterson has asked the U.S. Justice Department for a "threat assessment" if he were to begin trying to collect taxes on cigarette sales by Indian tribes, including the Seneca Nation, reported The Buffalo News.

In a letter to top federal prosecutors, the governor also suggests he might need help from Washington in putting down any possible unrest by Indian tribes if the tax collection starts.

The unusual request, dated September 23 to the U.S. Attorneys in New York state, including Buffalo, seeks the federal government's [image-nocss] assistance to the "likelihood of violence and civil unrest" if he began enforcing the state's collection on the tax-free cigarette sales.

"I would appreciate your operational commitment to help mitigate any disturbances that might occur in each of your districts if implementation were to occur," Paterson wrote to the U.S. Attorneys in Brooklyn, Syracuse and Buffalo, according to the letter obtained by the newspaper. He did not elaborate.

"We are going to let the letter speak for itself," Morgan Hook, a spokesperson for Paterson, told the paper.

The governor said it is his "intent" to continue to try to negotiate agreements with the tribes over their longstanding refusal to collect taxes on the cigarette sales, which amount to hundreds of millions of cigarettes sold tax-free each year at smoke shops, in the mail and over the Internet.

But Paterson is under mounting pressure from some legislators to begin collecting the tax, said the report. Some lawmakers say the state is losing upwards of $1 billion by not collecting the taxes on the Indian sold cigarettes. The state faces a $3 billion deficit and lawmakers are desperately looking for ways to slash the red ink without resorting to spending cuts, such as to education, that the governor proposed last week.

Word of the letter comes just a week before the state Senate is to hold hearings on the issue of the uncollected sales, the report said.

Sources told the Times that the Seneca Nation was informed last month by Paterson's office about the letter to U.S. Attorney Kathleen Mehltretter of the Western District of New York, as well as Andrew Baxter in Syracuse and Benton Campbell in Brooklyn.

"We see the letter as nothing more than the Governor doing his job to assess the historic consequences of what happens when the state tries to violate our treaty rights," Richard Nephew, chairman of the Seneca Nation Council, told the paper.

Paterson begins his letter asking the top federal prosecutors for "your guidance as to the potential consequences" if the state were to begin collecting the tax. The U.S. Supreme Court in 1994 said the state had the legal right to collect taxes on cigarette sales by Indians to non-Indians.

The governor noted past unrest, including battles in 1997 along the New York Thruway when then-Gov. George Pataki tried to collect the taxes.

"As a result of such unrest, a policy of forbearance was put in place" by the state tax department, Paterson wrote.

Governors going back to Mario Cuomo and continuing to Paterson have avoided resolving the tax issue. The matter has intensified as the state over the years has sharply raised tobacco excise taxes, said the report, giving Indian retailers a major leg up on the competition, raising the criticism of non-Indian retails and health groups, who maintain the state's goal of raising taxes to help dampen consumption has been undermined.

Keywords: 
taxes