On Wednesday, the state was supposed to begin collecting $4.35 per pack on cigarette purchases made by non-Indians on the Akwesasne and Ganienkeh reservations.
But a lawsuit filed by filed by the Seneca and Cayuga tribes in western New York has resulted in a temporary restraining order that halted collection of the taxes on reservations statewide.
According to Jessica Bassett, deputy press secretary for Gov. David A. Paterson, the decision enjoined the Department of Taxation and Finance from implementing the new tax law.
“We are disappointed today that the Appellate Division has stayed the implementation of our statute and regulations with respect to licensed stamping agents,” she said. “Despite this ruling, we believe the state’s legal arguments are sound, and we believe that ultimately the state will prevail in this matter.”
The St. Regis Mohawk Tribe in Franklin County also has a separate lawsuit pending on the issue.
The move would have raised the average price from $27 to $70.50 per carton for national-brand smokes and from $13 to $56.50 on cartons manufactured at the St. Regis Mohawk reservation at Akwesasne.
Akwesasne-based businesses sell about 700,000 cartons of cigarettes a year, according to tribal officials.
The state said income from these tax collections was expected to total $150 million this year.
SEPT. 1 START DATE
New York passed a reservation-taxation law in the 1990s, but protests flared around New York when the state tried to collect.
The issue has been discussed from time to time since then, but it surfaced again in June when Albany ordered wholesalers and tax-stamp agents to begin charging customers a tax for all the smokes sold, starting Sept. 1.
COUPON SYSTEM SHUNNED
St. Regis Mohawks, like the other reservation communities in the state, were given the choice until July 31 to participate in a coupon system that would have allotted Akwesasne stores 119,000 coupons for dispersal to Indian buyers so they could get refund on their purchase of smokes.
The number of coupons issued per reservation is based on tribal-membership numbers and a formula the state used to calculate how many would be needed on each territory.
But tribal officials were concerned that there was no guarantee that each store would receive enough coupons to give their customers and that the system would force Indians to implement a state-government policy.
The Mohawks asked for an increase in their allotment, but later withdrew the request when community members objected to leadership seemingly agreeing to the state’s plan.
They asked the council to look at alternatives, such as withholding casino funding and a boycott of some kind to express their disapproval of the tax collection.