Paterson to Negotiate with Tribes on Cigarette Taxes

N.Y. governor says he hopes to avoid violence

Greg Lindenberg, Editor, CSP

ALBANY, N.Y. -- New York Governor David A. Paterson insisted the state has a legal right to collect taxes on Indian retailer cigarette sales, but said he wants to negotiate with the tribes to end the years-long stalemate instead of trying to force an immediate halt to the tax-free sales, reported The Buffalo News.

In his most extensive remarks on a subject that has stymied a long line of governors before him, Paterson last week suggested that fear of violence by Native American protesters is driving part of his decision to take a slower route than the state legislature is demanding. "I [image-nocss] would like to at least begin by going up and having a conversation. Now, if it 's just, 'We do it because we feel like it, and there's nothing you can do about it, get out of here,' well, that might create a different reaction," the governor said in an interview with the newspaper.

Native American leaders, who have been hearing a growing number of legislators and others pressing Paterson to collect the tax to help raise revenues to reduce the state's budget deficit, sounded relieved.

"We wanted to thank the governor for his recognition and positive approach. We welcome the opportunity to meet with him on a nation-to-state basis in the near future," Seneca president Maurice A. John Sr. told the paper. Seneca retailers are the nation 's top sellers of tax-free Indian cigarettes.

Advocates for collecting the tax, including lawmakers who say the uncollected revenues are needed to help the state through its fiscal challenges, said Paterson is making a mistake by trying to negotiate a solution—a route previous governors have tried and failed.

"It's very hard for me to imagine why they would want to voluntarily give up a license to print money, which is what they have now," Russell Sciandra, director of the Center for a Tobacco Free New York, told the newspaper. The group is one of many—including the New York Association of Convenience Stores (NYACS)—pushing Paterson to back legislation to begin collecting an estimated $400 million in annual tobacco taxes on Indian sales to non-Indians.

In the interview, Paterson said he wants to treat talks with Indian leaders "almost like international diplomacy." He said he wants to reach an "accommodation" with the tribes on the tax issue; he did not say precisely what that may entail. "I think that they feel that they are always labeled as the villains in this whole process, and maybe if they were treated or thought to be just like other businesses here and they started to feel like they 're part of our state, even if they live on sacred land, that we might be able to reach an accommodation," the governor said.

Paterson recalled the confrontations between Indian protesters and former governors Mario M. Cuomo and George E. Pataki. In 1995, the Thruway was shut down during violent clashes between Indians and state troopers when Pataki tried to collect the tax. He immediately backed off the effort. Former Gov. Eliot L. Spitzer also talked tough on the topic but backed down and sought a conciliatory approach.

Paterson said he recognizes that other governors before him have failed on the issue, said the report.

Asked if fear of violence entered into his approach, he said, "I recognize that the threat must have been the reason that Gov. Pataki in his last 11 years never went back and never tried again, and Gov. Spitzer in his year in didn't go right in and try to do it as Gov. Pataki did in his first year. So, learning from my predecessors—what I got from their approach was antagonist but distant. I would like to close that gap and talk to them about how we might work this out."

Last week, NYACS called on the governor and the state legislature to pass legislation to require that all taxes on all cigarettes delivered by any wholesale distributor to Indian or non-Indian retailers be pre-paid by the wholesale distributor. (Click here for CSP Daily News coverage.)
When asked to comment about Paterson's desire to negotiate with the tribes, NYACS president Jim Calvin told CSP Daily News, "I want to be hopeful, I really do. But 15 years of 'let's negotiate' and deliberate delay from past governors have resulted in nothing but more heartache and economic suffering for convenience store operators who play by the rules. Thus, we're a tad skeptical."

Legislation is heading Paterson's way to require wholesalers to attest that they only make legal sales to Indian retailers. Advocates say a new measure is needed that would require every cigarette in New York to be sold with a tax stamp affixed. Paterson said he had not yet decided whether he will veto the measure given final approval two weeks ago on the collection front. "But I know that I believe I have the legal right to collect the taxes, so I don't need the bill to come to the conclusion that we have a legal right in this state to do that," he added.

With the state facing a $6.4 billion deficit next year and lawmakers just having completed a $600 million round of cutting to this year's finances, Paterson acknowledged that he would like the tobacco tax money from the Indian sales to non-Indians. He also questioned wildly ranging estimates—as high as $1.6 billion—for what the tax collection effort would bring annually. He noted how Senate Majority Leader Dean Skelos (R) called on him to collect the taxes as a way to avoid cuts to popular programs like education. He said some proponents of the tax collection use it as a "good political issue" and a "shill out" to avoid dealing with deeper budget problems.