Some lawmakers worry about violence if state officials try to collect cigarette taxes from the Indian nations.
View full sizeLobbyists stand outside the Senate Chamber at the Capitol in Albany on Monday. As of Monday, about 70 percent of the more than $135 billion budget had been approved in pieces through weekly emergency spending bills, rather than in the legally prescribed process of striking a total budget agreement. The budget was due April 1.ALBANY, N.Y. — New York voted on Monday to become the nation’s most expensive place to smoke and may have set the state on a course for a “clash of cultures” as it seeks to collect taxes on cigarettes sold by Indian tribes.
The Legislature approved Gov. David Paterson’s $1.60 increase in the state cigarette tax that’s now $2.75 per pack. The vote will soon increase the cost of cigarettes in New York state from about $7.60 a pack to $9.20. In New York City, which has its own $1.50 tax, the price could jump to near $11. Paterson’s bill would also double the tax on chewing tobacco and many other tobacco products while finally taxing little cigars as much as cigarettes.
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By comparison, a pack of cigarettes sold in out-of-state border towns would range from about $6.45 to $7.85. And more smokers might opt for tax-free packs sold by Indian tribes and smugglers.
“It’s a punitive and regressive tax on those with addiction,” argued Democratic Assemblyman William Parment of Jamestown. He said people in his district will now make even more “cigarette runs” for their friends, relatives and co-workers across the state line to Pennsylvania and to two nearby Indian reservations. “It is an abuse of our taxing power.”
Assemblyman Michael Benjamin, a Bronx Democrat, said he’s concerned any time the cigarette tax is raised because it promotes illegal sales, and that funds criminals and terrorists “who want to harm our nation.”
But legislators like Sen. George Maziarz, a Niagara County Republican, predicted a “clash of cultures,” and worries about violence when the state tries to collect cigarette taxes from Indian smoke shops.
That goal has eluded three previous governors and prompted threats of violence in the 1980s and 1990s, including the temporary closing of the state Thruway through Indian land when it was blocked with burning tires and debris.
“It’s an act of war,” J.C. Seneca, a Seneca Nation councilor, told The Buffalo News. Seneca said Paterson has chosen a “path of controversy and confrontation, (and) if anything happens, it’s on their hands.”
That concern has delayed any enforcement for decades, even as New York lost an estimated hundreds of millions of dollars a year in revenue and stores near Indian land contended with a large price disadvantage. Meanwhile, the tribes successfully defended centuries-old national and state treaties that they said assured them that as a sovereign nation they didn’t have to pay state taxes.
“The governor would never enter into an agreement with an Indian nation unless it was in the best interest of the state and localities, and at this time no agreements have been entered into,” said Paterson spokesman Morgan Hook. “The governor will pursue a policy that respects the sovereignty of Indian nations while ensuring the collection of taxes from those who rightly owe them.”
Sen. Jeffrey Klein, a Bronx Democrat, credited Paterson for striking a deal that will provide the state $160 million this year and $500 million to $1 billion a year in coming years. “We’re asking hard-working taxpayers each and every day, each and every year to pay their taxes,” Klein said. “Certainty Native Americans shouldn’t be excluded from that. It’s been proven by the United States Supreme Court.”
But opposition was lining up Monday against Paterson’s plan to tax Indian-sold cigarettes to non-Indians. A coalition of convenience stores, business advocates, tobacco manufacturers and retailers said the bill would give too much power to the governor, without the Legislature, to make agreements or “compacts” with tribes. The Enforce the Law-Collect the Tax Coalition also said Paterson’s plan won’t work and will provide tribes with loopholes to continue avoiding taxes while still giving tribal stores a price advantage.
The tobacco taxes are a big revenue raiser for the 2011-12 budget, which was due April 1. The spending plan is now being completed in pieces with 30 to 40 percent left to do before Paterson’s June 28 deadline to approve a budget before he imposes one. Monday was the scheduled last day of session.
The Legislature also approved Paterson’s latest emergency spending bill that covered cuts in aid to local governments, and consolidations of agencies including those in public protection.
In the Assembly floor debate on Friday, Finance Committee Chairman Herman “Denny” Farrell said about $4.9 billion of the $9.2 billion deficit would be addressed after the latest emergency bill was passed Monday. That leaves the Legislature and governor with little of the budget to address $4 billion in deficit and to pay for major, well-protected items such as school aid.