New laws put into place by the New York State Legislature would allow Native Americans living on reservations to buy tobacco products tax-free but everyone else would have to pay. To make that possible, a reservation can either take a set amount of tax free cigarettes from wholesalers each month for members or use a proposed tax-free coupon system.
"The theory is that you would give an allotment of coupons to the Indian nations to give to their membership so that the Indians could buy tax free cigarettes," said Dan French, an attorney for the Cayuga Nation.
The Cayuga Nation has had a long running battle with state and local authorities over the sale of untaxed cigarettes and French was skeptical the state would be able to follow through on the new law. French believes the most important piece of the legislation is a clause that allows the Governor to directly negotiate settlements with individual Indian nations.
"I think that if individual Indian nations have settlement agreements in place with the state there either may not be a need to issue the coupons or the coupon system will be altered to fit with the settlement," said French. "So I think the Governor's office intends to try to settle these issues over the next two months."
Governor Paterson believes the state could bring in $150 million in revenue for New York by taxing cigarette purchases by non-Native Americans at reservation stores. Joe Heath, an attorney for the Onondaga Nation questioned that number on Tuesday and said "the state would lose more money in law enforcement and litigation costs than it would make up in taxes."
If the Governor negotiates with individual Indian nations, issues of cigarette taxes and the possibility of putting land into a federal trust would likely be considered. On Tuesday, representatives of several Indian nations said they expect those talks to continue over the next few months.
