Seneca educates lawmakers on treaty rights, tobacco economy
runningwolf
By Gale Courey Toensing
Story Published: Nov 5, 2009
Story Updated: Oct 30, 2009
NEW YORK – State lawmakers at a public hearing heard claims of “lost”
tax revenues ranging from tens of millions to billions of dollars from
untaxed cigarette sales on Indian reservations.
While none of the witnesses backed up their claims with substantive
evidence, the Seneca Nation of Indians presented officials with a
three-inch thick document on its treaty rights, legal history, and an
economic study by a Harvard economist that pinpointed how – and how
much – the nation’s tobacco-based economy benefits the state.
The hearing, which was chaired by Sen. Craig Johnson, D-N.Y., was an
all day – and sometimes heated – event at Manhattan Community College
Oct. 27. The aim was to investigate why the state has failed in its
attempts to collect cigarette taxes from reservation cigarette sales
to non-Natives.
J.C. Seneca, a Seneca Nation tribal councilor, testifying on behalf of
the nation, addressed that question at the beginning of his testimony.
“The answer to that question, put simply, is that your government has
no authority to do so, that the United States government has promised
the Seneca Nation that your taxes would not apply to our territory,
and, perhaps most importantly, you cannot force the Nation and the
Seneca people to be the state’s tax collectors,” Seneca said.
The hearing was the latest battle in a cigarette tax war that has
ebbed and flowed through two decades, characterized by lawsuits and a
“forbearance policy” in which the state claims entitlement to collect
taxes from cigarettes sold to non-Indians on Indian land, but declines
to do so.
The hearing comes on the heels of a letter Gov. David Paterson wrote
to federal prosecutors, asking for a “threat assessment” on the
potential for violence if the state tries again to collect the taxes.
More than 100 citizens from Seneca and other Indian nations across the
state attended, responding freely to the witnesses’ testimony with
cheers, applause or rebukes.
Seneca and Robert Porter, the nation’s general counsel, said the plain
language meaning of the nation’s 1842 Treaty of Buffalo – which says,
in part, that the U.S. “will protect such lands of the Seneca Indians,
within the State of New York, as may from time to time remain in their
possession from all taxes, and assessments for roads, highways, or any
other purpose.”
Johnson suggested the treaty language could mean the state is only
prohibited from assessing real estate taxes. He asked why the nation
has never taken the issue to court.
“It seems to me that would put an end once and for all to the question
of whether or not New York state can collect sales tax on cigarette
sales to non-Native Americans,” he said.
“We wouldn’t trust the court to rule in our favor,” Seneca said,
adding that the nation determines the meaning of its treaties, not the
courts.
Porter noted that the nation’s gaming compact does not concede
jurisdiction to courts, but instead stipulates an arbitration process
in the case of unresolved conflicts.
The notion that the nation would trust the state’s courts to resolve a
dispute is just as unlikely as the state trusting the nation’s courts
to resolve a dispute, Porter said.
“We’re dealing here with international law; we’re dealing with a
treaty to which you are not even a party. You are simply obligated
under your law to adhere to those treaties. We need to go to the
United Nations to achieve the proper degree of involvement in our
internal disputes. If that is the direction you’re going in, we’ll
gladly invoke that as well as we have with the president of the United
States.”
Sen. Martin Golden tried to persuade Seneca that it would only be
“fair” to share the nation’s “taxes” with New York tax payers.
“If you agree that most of this (the sale of untaxed cigarettes) is
going on across the borders you should have no problem in allowing
state regulators to be part of the Seneca Nation and other nations to
monitor (your sales). … We want fairness, you want fairness. Let’s get
together so those dollars that are part of Indian nations are equally
shared with the tax payers, especially when it comes to those non-
tribal members that are purchasing 49 cartons of cigarettes,” Golden
said.
Seneca replied that a taxation agreement has already been made – the
Treaty of 1842.
Golden insisted that the state needs to “collect those taxes “before
it falls into greater debt” – a theme reiterated by several senators.
Sen. George Maziarz said he wants to “dissociate” himself from Golden
and comments by other lawmakers who said Indians take social services
from the state, but give nothing back.
“I’m probably the only one who has grown up and lived and currently
lives next to a Native American community. We all went to public
schools, they went to the Indian school and they were not equal, I can
tell you. The roads on the rez were always the last to be paved.
Health care was almost nonexistent.”
Sen. Michael Nozzolio raised the issue of Paterson’s “threat
assessment” letter and told Seneca he hoped the nation “would not
condone violence.”
“Indian people struggle every day to fight for what we have and we’re
going to continue to fight. When violence happened in the past, it was
precipitated by the state. Seneca people weren’t armed. We didn’t have
guns. We didn’t have clubs. We didn’t invade anybody’s territory,”
Seneca said.
Sen. Eric Adams stood up for the nation’s right to defend itself.
There was no consensus on the estimated “lost taxes.”
William Comiskey, the tax and finance department’s deputy
commissioner, said losses could be as much as $225 million annually,
“assuming full compliance.”
But full compliance can’t be assumed because it’s impossible to
calculate the number of untaxed cigarettes distributed through non-
state licensed sources, he said.
Stephen Rosenthal described himself as “the largest distributor of
tobacco and cigarettes in New York” until untaxed cigarette sales
drove him out of business. He claimed with no evidence that the
state’s loss is $1.6 billion.
Seneca pointed out that the nation is one of the largest employers in
western New York, providing jobs with benefits for more than 6,300
mostly non-Native people.
Harvard economist Jonathan Taylor’s study detailed how every $1 of
gross profits accrued to the nation’s tobacco businesses provides the
state economy with $1.67. In 2007 alone, the nation’s combined tobacco
and gas businesses generated an estimated $313 million and spun off
nearly $200 million into the economy. The nation’s economic activities
have contributed more than $1.1 billion to the statewide economy over
the last decade, he said.
So even if the nation is not subject to taxation, the ripple effect of
its economy benefits the state, Seneca said.
The committee will review all the testimonies and additional material
that may be submitted and issue a report by the end of the year or
early next year.
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