"The recent increase in the state tax on cigarettes appears to have made things even worse for convenience stores dealing with unfair competition from Indian enterprises that sell tax-free goods.

The New York Association of Convenience Stores this week reported that smokers are avoiding their neighborhood stores in record numbers and instead buying their cigarettes on the black market, in border states with lower taxes or — especially pertinent to Cayuga County — at tax-free shops operated by Indian tribes.

Help may be on the way, because the law that increased cigarette taxes in New York also called for a system to curb the sale of tax-free smokes by tribes, and on July 29 the state tax department released its new policy.

Beginning Sept. 1, Indian tribes in New York are supposed to sell untaxed cigarettes to only their own members, and the state has developed mechanisms allowing tribes a certain amount of cigarettes for that purpose.

Indian nations in New York have until Sunday to tell the state if they want to participate in the tax exemption coupon system. If a tribe decides against it, the state will use what it’s calling “prior approval,” which would allow the tribe to purchase tax-exempt cigarettes from wholesalers based on tribal membership. In the case of the Cayuga Indian Nation, operators of Lake Side Trading in Union Springs, the state has determined that the tribe would be allowed 80,400 packs of untaxed smokes per year to be sold only to its 947 members (based on the 2000 U.S. census)."

Get the Story:
Our View: Tax avoidance gives Indians more business (The Auburn Citizen 8/12)

Also Today:
NY state cigarette tax hike burns collections: group (Reuters 8/12)

Relevant Documents:
ATF Letter on Tribal Consultation (May 19, 2010)

Prevent All Cigarette Trafficking Act:
H.R.1676 | S.1147

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