- Associated Press - Tuesday, September 14, 2010

CATTARAUGUS INDIAN RESERVATION, N.Y. | 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-Indian customers is viewed as yet another attack on American Indian 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,” he said at his smoke shop in Southampton.

Nine New York tribes are in the cigarette business. The $4.35-a-pack 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.

What was organized as a peaceful “people’s rally” recently alongside the New York State Thruway where it bisects the Senecas’ Cattaraugus reservation brought reminders of 1997 chaos that erupted the last time the state tried to tax reservation sales.

Protesters then ignited 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. “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 charges 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.

Earlier this month, a state appellate judge in Rochester restored a restraining order that barred the state from collecting the tax. The state appeals court’s five-judge panel took up the case last week, but ended the session without saying when a ruling would be issued.

On Tuesday, a state appeals court in Buffalo lifted a temporary order blocking the state from collecting taxes on cigarettes sold by some American Indian stores to non-Indian customers. State officials did not comment on the ruling.

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,” said Jessica Bassett, a spokeswoman for Gov. David A. Paterson.

The state’s attorneys say U.S. Supreme Court precedent is on their side, allowing for taxation of sales to non-Indian customers while imposing “minimal burdens.”

Allies include non-Indian 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 American Indian 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 smoke shop 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 American Indian businesses.

Investigators stress that they do not know whether whoever placed railroad ties across CSX tracks was American Indian, or whether the act was a protest or prank, but they noted that a “No Mail-No Rail” sign was hanging 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 American Indian mail-order businesses from shipping cigarettes through the mail.

AP writer Frank Eltman contributed to this report.

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