Idaho tribes score victory with tax ruling

TUESDAY, AUGUST 20, 2002

The state of Idaho does not have the right to tax the sale of gas in Indian Country, a federal judge has ruled.

In a major victory for three tribes, U.S. District Judge David O. Carter barred Idaho officials from enforcing a new state law that authorized the tax. His August 16 decision, released yesterday, said only Congress has the power to regulate Indian commerce.

"Congress has not created a specific authorization for states to tax motor fuels sold on Indian reservations," Carter wrote in an 11-page decision.

The ruling represents another chapter in a long battle over Indian taxation. The Coeur d'Alene Tribe, the Nez Perce Tribe and the Shoshone-Bannock Nation have been forced to collect and remit a 25-cent-per-gallon tax on gas sold on their lands.

Over the years, the tribes have handed over millions to the state, money that would otherwise go to their communities. The Shoshone-Bannock tribes, for example, cite $22 million in lost revenue.

The tax was finally struck down in June 2001 by a unanimous Idaho Supreme Court. The U.S. Supreme Court refused to hear the case after Idaho Attorney General Al Lance appealed.

In response, Idaho Republicans this past spring rushed to overturn the decision and reinstate the tax by making it retroactive to 1996. They did so even though Lance, in a legal opinion, said the move was unconstitutional.

Carter's decision affirmed that notion. He rejected the state's argument that the Hayden-Cartwright Act of 1936, a federal law, authorized the tax. Closely following the Idaho Supreme Court, he also ruled that the legal incidence to tax fell on the tribes, not the state.

Despite the legal victories, the tribes have yet to receive refunds for the taxes they paid under the old scheme. Under the new law, the money was deposited in an escrow account Carter said can be released unless an appeal is planned.

The Nez Perce and Coeur d'Alene tribes claim they are owed less than $1 million. The Coeur d'Alene Tribe plans to collect its own 25-cent tax on Indian and non-Indian consumers and use it to finance road construction and repair.

Get the Ruling:
Coeur d'Alene Tribe, et. al. v. Hammond, et. al. (8/19)

Relevant Links:
Coeur d'Alene Tribe - http://www.cdatribe.com
Nez Perce Tribe - http://www.nezperce.org
Shoshone-Bannock Nation - http://www.sho-ban.com