Written August 24, 2010     

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Should Indians be allowed to sell untaxed cigarettes to non-Indians?

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© 2016 Bob Lonsberry


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I feel sorry for the Indians.

They’re right.

But they’re also wrong.

And the state is right. But it’s also wrong.

And in another week the decades-long battle between New York State and the Iroquois Confederacy over the tax on cigarettes could come to an ugly and dangerous head.

In the run-up to the state’s September 1 deadline, the Indians have had their first multi-tribal summit in more than 200 years, and the State Police SWAT team has been training hard for whatever comes.

The last time it got to this juncture, the Indians burned tires in the Thruway and shut down an Interstate.

This time it could get worse.

Either way, it’s going to be ugly. Fairness will be hard to find, businesses and taxpayers will be hurt, and everyone is going to come away unhappy.

My feelings on the issue are complex.

First off, I reject the premise that the Indians hold dear – that their tribes are sovereign nations. They are, of course, nothing of the sort.

Some have pretended that they are, out of kindness or political correctness, but tribes have none of the characteristics of sovereign nations and are, every bit, part and parcel of the United States.

Indians are Americans just like everybody else, and the sooner everyone can get that through their head, the better.

But some Indians have lived separate and distinctive lives, and they have built livelihoods around their unique situations.

Like the reservation smoke shops.

In New York, on various tribal properties, Indians sell untaxed cigarettes to non-Indians. This results in great savings to the people who buy the cigarettes, great profits to the Indians who sell the cigarettes, and great headaches for the state that doesn’t get its tax money.

It also causes real problems for non-Indian stores that have to collect tax and find themselves at a great competitive disadvantage.

The Indians say that they are sovereign, and that New York State can’t order them to collect tax.

I think that is ridiculous.

But I recognize that that has been the way things have worked for a very long time.

As long as I’ve been aware, Indians have sold non-taxed cigarettes and I’ve had friends driving to Indian smoke shops to buy their cigarettes. Recognizing that government is the prime profiteer of the cigarette business, being able to avoid the suffocating tax burden on cigarettes has a natural appeal for smokers. So people go to the Indian stores.

This has been very hard on New York’s tax coffers, and on normal convenience stores and gas stations.

And it hasn’t been right.

But it has been the way it is.

And year after year, governor after governor, the state threatened to crack down.

Threatened, but didn’t act.

Consequently, for years on end, this system of untaxed Indian smoke shops has flourished.

Families, businesses and tribes have built their income and their prosperity on it. It is clearly the status quo.

And a part of me is against the state cracking down now. A part of me feels that if something has been allowed to go on for years, out in the open, and the state has done nothing about it, then that ignoring of the law has essentially nullified the law.

If the state didn’t enforce it yesterday, it can’t capriciously enforce it today.

I don’t know if any principle of law allows for such a thing, but a principle of common sense does. It’s like somebody trespassing across your property so much that they make a path, and they use that path all the time, and you never tell them not to, and years go by, at a certain point, though it’s still your property, they’ve got a right to walk on that path. This is something like that.

And after years and years of allowing the economies of some tribal areas to build up around these smoke shops and similar no-tax gas stations, it’s not right for the state to, on some magic day, pull the rug out from under their livelihoods.

Trying to make the most of their situation, Indian tribes have used tax uncertainties to sell cigarettes. They do it in their smoke shops, they do it through the mail and over the Internet, and large local businesses have grown to support many Indian families and institutions.

Stopping the practice when it started was the right thing to do. Stopping the practice after you’ve allowed it to become the foundation of a community’s economy is the wrong thing to do.

I don’t have an answer, but I do have an objection.

Both sides need to give, and a movement toward one tax system for all stores in New York – Indian and non-Indian alike – needs to begin. But it should be done in a way that doesn’t collapse tribal economies or bankrupt Indian businesses. It took years to climb this mountain, and it may take years to climb back down.

Because both sides are right, and both sides are wrong.

And government greed, wrapped up in the camouflage of enforcement of law, should not be allowed to bankrupt their tribes and their members.

- by Bob Lonsberry © 2010

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