WASHINGTON -- The Supreme Court on Tuesday ruled that states have the power to tax fuel sold on Indian reservations, reported the Associated Press. In a 7 to 2 vote, the high court said Kansas can tax distributors who sell fuel at an Indian-owned and operated gas station by the Prairie Band Potawatomi tribe's casino, near Topeka. Most of the Nation Station's fuel customers are casino patrons.
Writing for the majority, Justice Clarence Thomas said the Denver-based 10th U.S. Circuit Court of Appeals was wrong in ruling that the tax violated tribal sovereignty. "[image-nocss] Kansas law makes clear that it is the distributor, rather than the retailer, that is liable to pay the motor fuel tax," Thomas wrote. "While the distributors are 'entitled' to pass along the cost of the tax to downstream purchasers...they are not required to do so."
The tribe had argued that it already collects taxes on fuel to pay for maintaining the reservation's roads, which are among the worst in the nation.
Justices Ruth Bader Ginsburg and Anthony M. Kennedy dissented, arguing that the fuel is "effectively double-taxed" and may force the tribe's station to operate at a deficit or go out of business. Ginsburg also said Kansas is not gaining much through the taxabout $300,000 annually. But, in doing so, she wrote, the state is preventing the tribe from imposing its own tax.
Click here to view the ruling in Wagnon v. Prairie Band Potawatomi Nation, 04-631.
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