The state will enforce the law requiring the collection of taxes from cigarettes sold at Indian smoke shops except those on Cayuga and Seneca land.
View full sizeCustomers waiting to buy tobacco products Aug. 6 at the SavOn outlet run by the Oneida Indian Nation in Verona. A federal judge has temporarily halted New York state's plans to begin collecting taxes from cigarettes sold at Cayuga and Seneca Indian smoke shops.
State officials say, however, that they'll enforce the law against all other tribes in the state, including those in Central New York.
"The ruling specifically mentions only the Seneca and Cayuga," said Brad Maione, spokesman for the state Department of Taxation and Finance. "The enforcement plan moves forward."
As of Wednesday, wholesalers who sell cigarettes to Indian retailers must pay the $4.35-per-pack tax upfront and then collect it from the tribes.
The Oneida and Onondaga have said they wont pay the taxes, and would stop selling name-brand cigarettes in favor of Indian-made brands. The Seneca brand, made by Seneca Indians, is already the biggest seller at the Onondaga Nation smoke shop, said Tadodaho Sid Hill. Senecas sell for $30 a carton at the Onondaga smoke shop, compared to $59 for a carton of Marlboros.
Smokers might not notice the difference immediately, because tribes can still sell tax-free whatever inventory they have on hand. When tribes place new orders with wholesalers, however, the wholesalers must pay the tax and affix state stamps to each pack.
Tuesday's ruling by U.S. District Court Judge Richard Arcara in Buffalo was a victory for the Seneca and Cayuga tribes, who filed suit last week to stop the collections. The tribes said the state's system for insuring that tribal members didn't have to pay the taxes infringed on tribal sovereignty.
State officials had estimated the tax would bring in $150 million this year, although other groups had estimated as much as $1 billion would be collected. Tribes sold about 24 million cartons of cigarettes – 240 million packs – in 2009, according to state records. The Senecas sold about half of that amount.
Arcara’s ruling is in effect for up to two weeks, and could be extended for another two. He will meet with lawyers next week to discuss holding a hearing on a longer injunction.
» Read the ruling: