"I have come to believe that almost all tobacco tax compacts are hopelessly out of date and have evolved into a fraud and a tool for economic exploitation. What is worse is that most tribes and their lawyers are completely unaware of what is happening to them.

In the 1980s and early 1990s tribes all across the country ended long-running, tribal-state tax disputes by entering into various forms of tax compacts. Most of these compacts dealt with multiple tax issues, of which tobacco was just one of them. The general result of tobacco tax compacts was that the tribe and state shared the tobacco tax revenue in some form.

These compacts created a modest price advantage for cigarettes sold on the reservation and stabilized a key business for tribes. But something happened to upset this balance.

In the mid ’90s, almost every state sued the major tobacco companies to get money ostensibly for health care costs related to tobacco use. In 1998, the states and tobacco companies settled their lawsuit by entering into the Master Settlement Agreement, a classic deal with the devil."

Get the Story:
Lance Morgan: The evolution of a fraud (Indian Country Today 3/6)