Cuomo to try his hand on Indian cigarette tax

ALBANY - Gov. Mario Cuomo was the first to push for it. Now, Gov. Andrew M. Cuomo wants to try it, too.

The new governor says he's determined to collect taxes on cigarette sales to non-American Indians on American Indian reservations. In his budget proposal this week, the governor factors in collecting $130 million from such sales in the coming fiscal year. If he succeeds, he would be the first New York governor to follow through on his promise to collect. Four predecessors, including his father, did not.

As attorney general, Cuomo defended the state in lawsuits brought by five Indian nations, including the Unkechaug, to overturn laws authorizing the state to collect the tax. While not part of the suit, the Shinnecock Nation in Southampton also relies on cigarette sales for income.

Penciling the money into the budget shows that "the governor fully intends to pursue" the issue, said Cuomo spokesman Josh Vlasto.

The lawsuits have been consolidated into one case, now before the Second U.S. Circuit Court of Appeals. The deadline for legal briefs from all sides is Friday; the court is expected to schedule oral arguments soon. For now, the court has barred the state from collecting.

That Cuomo tucked the tax into the budget came as no surprise.

"I was very encouraged," said Jim Calvin, head of the New York Association of Convenience Stores, which says that tax-free cigarettes on reservations represent unfair competition. "By putting it in the budget, he is expressing confidence that the state will win."

But Mark Emery, spokesman for the Oneida Nation, said "none of New York's previous efforts to impose taxes on sovereign Indian nations have ever succeeded, and there is no reason to believe this latest effort will succeed either."

Efforts to collect the taxes began under Mario Cuomo. But they heated up under Gov. George Pataki - when the potential tax revenue became exponentially more lucrative thanks to steady, steep increases in cigarette taxes. That triggered huge, non-taxed sales at reservation stores. What was once a small pot of money, in state budget terms, ballooned into an estimated $200 million a year. Calvin said state sales and excise taxes now come to $4.75 per pack.

Most observers say that Cuomo's lower figure means he thinks that even if the state wins the federal case, it will not be able to immediately begin collecting the tax money.

In 1997, while Pataki was governor, the Seneca Nation shut down part of the state Thruway in Western New York to protest an attempt to tax their cigarette suppliers. Like Pataki, Eliot Spitzer and David A. Paterson also promised to collect the taxes but failed.