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Jun 11, 2018 3:39 PMPublication: The Southampton Press

Court Ruling Allowing State To Tax Cigarettes Sold By Tribes Won't Have Much Effect Locally

Smoke Shops line Montauk Highway along the border of the Shinnecock Reservation and the Town of Southampton. GREG WEHNER
Jun 12, 2018 1:40 PM

The State Court of Appeals unanimously upheld a 2010 decision last week, giving the state the right to collect sales tax on all cigarettes sold on Indian reservations to non-Native Americans.

Some Shinnecock Indian Nation business owners sell tax-free cigarettes at shops along Montauk Highway. Tribal Trustee Lance Gumbs, who owns one of the shops, said the court’s decision is merely a rehash of the earlier decision—and he and other Shinnecock shop owners will continue to sell untaxed cigarettes.

“We do not believe it applies to Indian-made brands or interferes with our right to sell,” Mr. Gumbs said on Monday of the court ruling on Thursday, June 7. “It’s part of the argument we’ve had since the ’80s, that we are not the tax collectors for the state.”

New York State began enforcing the new cigarette tax policy adopted in 2010 on Native American sellers. Tribes had long sidestepped charging taxes to non-Indian consumers because of their own tax-exempt status.

Seeking to capture what the state said was more than $200 million in lost tax revenue, and to even the competitive playing field for non-Indian tobacco sellers, the law imposed the tax on wholesale suppliers who had been delivering cigarettes to Native American shops around the state. When that happened, the Shinnecock business owners, and other Native American smoke shops around the state, began selling Native American manufactured cigarettes exclusively, dodging the tax.

James Calvin, the president of the New York Association of Convenience Stores, said in a press release that for the past 20 years, New York-based Native American tribes who sell cigarettes tax free have cost the state billions of dollars. He added that when tribes sell cigarettes outside of the state’s umbrella, they are thwarting public policies designed to reduce smoking.

“In accordance with today’s unanimous Court of Appeals Ruling, the members of the NYACS look forward to the State Tax Department moving swiftly to begin collecting applicable taxes on cigarettes sold by Native American enterprises to non-Indian consumers, restoring a level playing field once and for all,” Mr. Calvin said in the statement.

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