Ruling bars cigarette tax on sales by Indians
Restraining order issued against state
The state is facing a new legal hurdle in its effort to collect taxes on cigarettes sold on Indian reservations.
A judge has issued a ruling that would temporarily block the state from enforcing a new tax policy.
An attorney for a Seneca tobacco retailer and a northern New York tobacco wholesaler said State Supreme Court Justice Rose H. Sconiers issued a temporary restraining order Wednesday. The ruling directs state officials to appear in court again Jan. 27 to explain why the judge shouldn’t issue an injunction barring the tax collection.
Margaret A. Murphy, a former Buffalo city judge who is representing Seneca tobacco merchant Scott Maybee and Day Wholesale of Tupper Lake, said she is not surprised by the ruling. Murphy played a key role last year in derailing New York’s last attempt to collect taxes on tobacco sold on Indian reservations.
While she said the case might seem complex to some people, Murphy insisted the issue can be boiled down to a few simple facts. One key factor, she said, is that state officials have yet to develop a system of rules and regulations for tax collections on reservations. For example, she said the state has not set up a process for providing rebates to Native Americans who pay taxes on cigarettes bought in reservation stores.
Murphy criticized state officials for creating an “us vs. them” scenario in the long-festering dispute over whether taxes should be collected on reservation sales. Murphy said other states have “shown respect for the sovereignty of tribal governments” and have negotiated tax compacts with tribal leaders. Officials in New York have taken another tactic, said Murphy.
“You can’t point to [reservation] retailers and wholesalers, call them criminals, then expect them to come to the table,” Murphy said.
Officials from the state attorney general’s office could not be reached to comment Thursday.
Earlier this month, Gov. David A. Paterson signed legislation requiring cigarette wholesalers to prove to manufacturers that they are complying with rules that require the payment of taxes on tobacco sold to non-Native Americans.
Murphy said there are “defects” in the legislation slated to take effect in mid-February.
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