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New York State's Tax Crisis Simmers Across Range Of Issues

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  • New York State's Tax Crisis Simmers Across Range Of Issues

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    New York State's Tax Crisis Simmers Across Range Of Issues

    (javascript:PrintWindow();) Posted: July 14, 2006
    by: _Jim Adams_ ( / Indian
    Country Today

    Today's feature article sponsored by _WellPoint, Inc. WellPoint, the
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    opportunity for you._
    (; ALBANY, N.Y. - Tribal struggles for tax sovereignty
    are heating up across New York state as the four-term administration of the
    sometimes sympathetic Republican Gov. George Pataki nears its end. As
    reservation governments and businesses brace for a more hostile political climate,
    the coordination called for by some still appears lacking; but tribal advisers
    maintain that the will to resist state tax encroachment remains strong.

    The burning question is whether the reservation sales tax issue will boil
    over during a nationally watched election for governor. The leading candidate,
    Democratic convention nominee Eliot Spitzer, has been steadily ratcheting up
    pressure on reservation cigarette sales in his current capacity as state
    attorney general. He has moderated his public stand on tribes, to the point that
    a potential primary opponent is making it an issue. But he recently
    intensified his administrative campaign to choke off wholesale cigarette supplies to
    reservation retailers.

    The state convenience store lobby, a hearty enemy of tribal competition, is
    trying to parlay its dominance of the state Legislature into a series of
    lawsuits against the Pataki administration and reservation economic players. With
    strong encouragement and financial support from non-Native gas station and
    retail groups, the state House and Senate passed a budget amendment in 2005
    directing the executive branch to collect the state sales tax on reservation
    sales to non-Natives. Pataki and his Department of Taxation and Finance have
    ignored the directive, prolonging a nearly 10-year policy of leaving
    reservation economies untrammeled.

    The New York Association of Convenience Stores and several allies are now in
    court asking state judges to compel Pataki and his tax men to enforce their
    measure. A lower state court in Albany heard the first arguments June 30.
    Just before, on June 20, the state Legislature passed a further bill in effect
    setting up a black list of wholesalers who supply reservation stores. Pataki
    has 55 days to decide whether to veto the bill.

    Several lawyers for reservation interests indicated that the latest bill
    raised constitutional issues that could take years to settle. ''It's clearly
    unconstitutional,'' said Joseph Crangle Jr., lawyer for the Seneca Nation of
    Indians. ''I'm sure it will be litigated.''

    In the meantime, some tribes and tribal businessmen are organizing against
    the state pressure. Frustrated by the lack of statewide coordination, the two
    state-recognized tribes on Long Island launched their own Native American
    Business Alliance, which they describe as a ''grass-roots effort to protect our
    economic independence.'' The group held a press conference and rally June 14
    at the Unkechaug Tribal Nation pow wow grounds on its Poospatuck Reservation
    and then led a caravan to the Shinnecock Reservation at Southampton. The
    group has also started up a Web site,

    ''It's not just a smokeshop fight,'' Unkechaug Chief Harry Wallace told the
    rally. ''It's not just a business fight. It's a fight for our people.''

    Wallace emphasized that the group had grass-roots support from members of
    the six nations of the Haudenosaunee (Iroquois), as well as the Pequots of
    Connecticut and the Narragansett of Rhode Island.

    Native businessmen from the Seneca Nation have sponsored private initiatives
    ranging from court challenges to poll-taking. The Seneca Business Steering
    Committee paid for a significant poll by Zogby International, which reported
    that a stunning 79 percent of New York state voters backed the governor
    against the Legislature on delaying reservation taxes. A group led by Seneca
    entrepreneur Scott Maybee has started several lawsuits against anti-cigarette
    legislation. Attorney Margaret Murphy represented Maybee and cigarette
    distributor Day Wholesale in the June 30 arguments against the convenience store

    The lineup resembles the pattern of the Native tax protests of the spring of
    1997, which spread after Wallace and the Unkechaug and the businessman-led
    government of the Senecas held out against state pressure to sign tax
    compacts. Grass-roots activists on other reservations, notably the St. Regis Mohawk
    and the Onondaga, repudiated leaders who had accepted a state plan for
    pre-collecting the sales tax on non-Indian sales. As protesters closed interstate
    highways and clashed with state police, Pataki withdrew the regulations. In a
    May 22 speech, he proclaimed a ''new era of peaceful cooperation'' with
    Indian sovereignty.

    His commitment to this era weakened in recent years, however, as the
    prospect of lucrative casinos gave the state more leverage over tribes. Although
    Pataki twice vetoed the recent legislative attempts to impose the reservation
    tax, his negotiators continued to seek tax concessions in broader talks over
    land-claims settlements and casino compacts. Several out-of-state tribes
    completely accepted state tax collections in return for a global settlement
    including a casino, until the talks were upended by federal court decisions quashing
    the land suits.

    The Seneca Nation refused to accept any discussion of state taxes in
    negotiating the compact that authorized three casinos in western New York, two of
    which are up and running at highly profitable rates. The St. Regis Mohawk
    tribal council initially accepted state sales tax collections at a long-sought
    casino in the Catskills. After the narrow failure of their land-claim settlement
    bill last year, however, they appear to have stiffened their position.

    In a recent mitigation agreement with Sullivan County, site of the projected
    Catskills casino, the St. Regis Mohawks offered an alternative to its
    previous state tax agreement. In the absence of a state compact, said the
    agreement, the tribe would provide a ''payment in lieu of taxes'' directly to the
    county. Although the amount would equal the projected state sales tax collections
    at casino businesses, a PILOT payment does not acknowledge that the
    recipient has taxing authority.

    The agreement also rejected the earlier state position that only sales to
    members of the tribe were nontaxable. It explicitly states that sales to all
    Natives are exempt.

    After an earlier settlement with the state, the St. Regis chiefs then in
    office promised that any trade agreements involving taxation would be submitted
    to the Akwesasne community for approval. The proposed land settlement went
    through a series of public meetings and referenda in the Mohawk territory on
    both sides of the U.S./Canada border.

    The unforeseeable factor, however, would be the policy adopted by Spitzer,
    the widely regarded front-runner, were he to be elected governor in November.
    Would he continue the punitive approach of the attorney general or would he
    embrace the ''peaceful cooperation'' of the present governor?

    ''We're always praying to the Holy Spirit to enlighten him,'' said the
    Seneca Nation's attorney, Joseph Crangle.
    Don't worry that it's not good enough for anyone else to hear... just sing, sing a song.sigpic

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