ALBANY, N.Y. -- New York Governor Eliot L. Spitzer is backing away from a promised effort to collect taxes on the sale of cigarettes and gasoline by Native American retailers, even while the state's budget deficit continues to rise, officials acknowledged Tuesday.
It will be next spring, at the earliest, before the state tries to bring in those tax revenues, according to a report by The Buffalo News.
Word of the retreat came as the state's budget office Tuesday released a gloomy picture of the government's finances: The budget [image-nocss] deficit is expected to be $4.3 billion next year, nearly $700 million more than forecast just three months ago, said the report.
Spitzer's own Budget Division said the failure by the state to collect an anticipated $200 million in Native American taxes is among the factors contributing to the significant risks to New York's revenue forecasts.
In his campaign for governor, and in the early days of his administration, Spitzer offered fiery rhetoric about the state's obligation and legal right to collect taxes from Native American businesses, the newspaper said.
In last spring's budget talks, Spitzer administration officials expected to receive $200 million in revenues from the Native American tobacco and gasoline sales taxes in the current fiscal year. Tuesday, the administration revised the forecast and said the budget is now counting on getting no revenue from the sales during this fiscal year.
We moved the enforcement date to April 1, 2008, to be realistic, Jeffrey Gordon, a Spitzer spokesperson, told the paper. The administration did not revise its forecast of obtaining $150 million in Native American tax revenues in the next fiscal year.
The governor has said he believes that sales tax for sales by Indian nations to non-Indians for cigarettes should be paid, and that is why he included it in this year's budget, Gordon said. There are sovereignty issues that need to be taken into consideration, and we are continuing to review possible approaches for collecting this revenue.
The move angered groups that previously were rallied by Spitzer's campaign pledges. How interesting that Day One is now being moved to April Fool's Day, James Calvin, executive director of the New York Association of Convenience Stores (NYACS), said of the governor's pledge that everything in Albany would change on the first day of his administration. While they fiddle, tax-collecting mom-and-pop retailers who swallowed the campaign rhetoric about enforcing the law continue to suffer the ravages of state-sanctioned tax evasion. What a cruel hoax, he told the paper.
Calvin told CSP Daily News, I can't begin to describe the level of outrage and betrayal our members feel toward Governor Spitzer on this issue. Some of them made major investment decisions based on his promise to level the playing field, and they are understandably seething.
He added, Spitzer campaigned on the slogan 'Day One, Everything Changes,' but once in office, his posture shifted to 'These Things Take Time.' In ignoring his oath to execute the laws of New York State, he's prolonging the agony of thousands of hard-working, tax-collecting, law-abiding retailers who deserve better.
Maurice A. John Sr., president of the Seneca Nation of Indians, said Tuesday evening, We commend the governor for honoring Seneca Nation sovereignty, and we are proud to be able to make our annual payments to the taxpayers of New York State from our gaming facilities in Salamanca, Niagara Falls and Buffalo. Those payments will be forthcoming soon.
Seneca retailers, who dominate the tax-free cigarette sales market among tribes nationally, say ancient treaties give them the legal right to sell without collecting taxes.
Earlier this year, Seneca officials threatened to collect tolls on the section of the Thruway that cuts through the Seneca territory in Western New York. Spitzer and Seneca leaders met in May and reported a warming in relations. The last time the state tried to collect the taxes, in 1995, violence erupted along the Thruway, with injuries to state troopers and Indian protesters.
Spitzer was steadfast in the past about the state's rights in the matter. The notion that somehow the anomaly is New York trying to collect these taxes is just wrong. Virtually every other state collects them, and it is proper that we do so, he said in an interview with The Buffalo News earlier this year.
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