Tensions rise as NY Indian leaders fight tax on reservations' cigarette sales to non-Indians

As New York Indian Nation leaders battle in courtrooms to preserve their tax-free cigarette market, tensions are rising on reservations, where the state's renewed efforts to tax sales to non-Native customers is viewed as yet another attack on Native American rights.

"For 200 years, we have been dealing with efforts to take our land, efforts to take our resources, efforts to take our jurisdiction," said Robert Odawi Porter, senior policy adviser and counsel for the 7,800-member Seneca nation in western New York, which says its cigarette business is a $100 million-a-year industry.

Trustee Lance Gumbs from Long Island's Shinnecock tribe called the tax "just another extension of ... the genocidal tactics of New York state."

"Every tribe is committed to fight this issue," said Gumbs at his smoke shop in Southampton.

Nine New York tribes are in the cigarette business. The $4.35 sales tax would force them to raise their prices and blunt their competitive edge over off-reservation sellers. Tribal leaders say the income loss would devastate economies.

A rally last week alongside the New York state Thruway where it bisects the Senecas' Cattaraugus reservation was organized as a peaceful "people's rally." But there were reminders of 1997 chaos that erupted the last time the state tried to tax reservation sales.

Protesters then lit tire fires and shut down a 30-mile stretch of the thoroughfare near the Pennsylvania line. More than 150 state troopers swarmed the area in response.

"If you're saying that we can't benefit from your people coming into our territories and helping to build up our economies as well as yours, then we don't want your trucks to come through our territories and benefit your economy," Seneca Ross John said at the Thruway's edge over the rush of traffic last week. "What's fair is fair."

State lawmakers facing a $9.2 billion budget deficit in June voted to start collecting the sales tax by requiring cigarette wholesalers to prepay the sales taxes before supplying reservation stores. Wholesalers would pass along the charge to tribal retailers.

The 2010-11 state budget anticipates $200 million in yearly revenues.

The Senecas, joined by the nearby Cayuga Indian Nation, have sued in federal court to have the state law invalidated, arguing that the state lacks jurisdiction on reservations. They also say it would saddle Indian nations with the task of fairly distributing a limited quantity of tax-free cigarettes to tribal members, a provision of the law.

The two western New York tribes also have gone to state courts to challenge the way New York tax officials adopted enforcement regulations.

Judges at both the state and federal levels last week temporarily blocked the tax collections from going forward as scheduled on Sept. 1, victories for the tribes but ones the state believes will be short-lived. U.S. District Judge Richard Arcara is scheduled to hear arguments in Buffalo on Tuesday, with the appellate division of state Supreme Court in Rochester set to consider the state case two days later.

The St. Regis Mohawk tribe has filed a separate federal challenge in northern New York.

"We believe the state's legal arguments are sound, and we believe that ultimately the state will prevail in this matter," Gov. David Paterson's spokeswoman, Jessica Bassett, said.

The state's lawyers say U.S. Supreme Court precedent is on their side, allowing for taxation of sales to non-Native customers while imposing "minimal burdens."

Allies include non-Native convenience store owners and a coalition of nonprofit health agencies that call untaxed, lower-priced cigarettes a public health menace that increases smoking rates and costly illnesses.

On reservations, however, any encroachment on tribal economies is viewed by some as a continuation of the U.S. termination practices of the 1940s and '50s.

"I don't think the United States, the Congress, the individual states will rest until all Indian people are extinguished and all of our rights are taken away," said J.C. Seneca, a Seneca tribal councilor and businessman who created the growing Buffalo brand cigarettes. "They want ... to take our rights, our heritage, our customs and tradition, our culture away from us, and our ability to be self-sustaining."

Many Indian retailers say they will stop selling name-brand cigarettes and offer only Native American brands produced within their territories before they go along with the new tax. Cigarettes produced and sold on the territories would be tax-exempt.

"The cigarette tax, that's a foot in the door," said smokeshop and gas station owner Cyrus Schindler, a former Seneca president. "They're going to come in and tax everything we've got."

Seneca President Barry Snyder and others have orchestrated a series of peaceful pushbacks to government policies, including full-page newspaper ads and the withholding of casino payments to the state. Meanwhile, the FBI and other agencies continue to investigate whether the July 5 attempted derailment of an Amtrak passenger train on the Cattaraugus reservation was in response to another cigarette-related law that hurt many Native American businesses.

Investigators stress they do not know if whoever placed railroad ties across CSX tracks was Native American or not, or whether the act was a protest or prank but they noted that a "No Mail-No Rail" sign hung from a railroad bridge over the New York State Thruway a half mile away. The sign apparently referred to the recently enacted Prevent All Cigarette Trafficking Act, a federal law that stopped Native American mail-order businesses from shipping cigarettes through the mail.

Snyder has condemned the track vandalism, which investigators said could have been deadly had the train with 354 people aboard derailed, and offered the investigative help of Seneca marshals. The nation and lawmakers may have their issues, Snyder said, but "we would never condone putting innocent railroad workers and passengers in danger as a result of those differences of opinion."

Nor do nation leaders want to erode public support and deter business at three casinos they have opened in recent years under a revenue-sharing compact with the state.

State Police Sgt. Kern Swoboda declined to speculate on the potential for additional trouble, but Paterson has said the state is on "high alert" after state police warnings that such enforcement could result in "violence and death."

"There's an old expression: 'Don't poke the bear,'" said Richard Jemison, chairman of the Seneca Free Trade Association, "because if you poke the bear, pretty soon that bear's going to get pretty angry and all of a sudden turn around and take a swipe at you. .... I think that's about what we're doing now. We're exploring the legal channels and doing all we can to fight what's happening to us."

___

Associated Press Writer Frank Eltman in Southampton, N.Y., contributed to this report.