UCE releases response to reporting on the recent Tax Law amendments compelling the collection of sales taxes from non-Indians on Indian land.
Recently, the New York Legislature as part of its budget enacted a number of amendments to the Tax Law to compel the collection of sales taxes from non-Indians on Indian land. Governor Pataki issued 119 vetoes relative to the legislative budget. In response the Legislature overrode his vetoes and its budget became law. In recent weeks various stories appeared in the press in which we feel incorrectly reports the state of the law as well as history.
I am writing in response to the recent news articles in the news media that
have appeared on Shows like WNYLive or in articles in newspapers like The
Buffalo News regarding the recent amendments to the Tax Law compelling the
collection of taxes on sales to non-Indians on Indian land. I would like to
clear up some of the misconceptions and rhetoric that appeared in these
articles.
First the State is not seeking to tax Indians, it is seeking
to enforce already existing laws on their non-Indian patrons. Currently,
non-Indians purchasing any goods or services on Indian land where the taxes are
not collected at the time of purchase must fill out a tax form (either a CG-15
or ST-130 depending on what was purchased) and pay the appropriate tax due
within 24 hours of the purchase. Failure to do so is a misdemeanor and may
result in fines and/or imprisonment. Let us be clear who is being taxed in this
tax scheme, it is non-Indians not Indians. The Indian retailer is merely a
conduit for the tax to be collected and remitted to the state. Indians making
purchases on their land are still tax exempt. Also there is no treaty or statute
that provides non-Indian consumers with an exemption from taxation on or off
Indian land. The loss of this tax revenue increases the burden of honest
taxpayers in Erie County as well as the State. It is also harmful to our local
economy in that honest businessmen are put at a competitive disadvantage.
Secondly, the often used analogy that puts Indian governmental entities
on the same level with Canada is not accurate. The United States Supreme Court
has stated in Nevada v. Hicks that "Our cases make clear that the Indians' right
to make their own laws and be governed by them does not exclude all state
regulatory authority on the reservation. State sovereignty does not end at a
reservation's border. Though tribes are often referred to as "sovereign"
entities, it was "long ago" that "the Court departed from Chief Justice
Marshall's view that "the laws of [a State] can have no force" within
reservation boundaries. Ordinarily, it is now clear, an Indian reservation is
considered part of the territory of the State." In fact Congress has given the
State of New York criminal and civil jurisdiction on Indian land (25 USC §§ 232,
233). Additionally, in June 2002 Judge Arcara dismissed the Grand Island Land
Claim in part because this was not the aboriginal land of the Seneca (who sided
with the British in the Revolutionary War).
The U.S. Supreme Court
stated in its 1980 decision, Washington State v. Confederated Tribes, "We do not
believe that principles of federal Indian law, whether stated in terms of
pre-emption, tribal self-government, or otherwise, authorize Indian tribes thus
to market an exemption from state taxation to persons who would normally do
their business elsewhere." The Court also noted that the State of Washington had
the right to seize unstamped cigarettes to enforce its valid taxes.
Given the fiscal crisis we are facing in New York, the State's policy of
enforcing its lawful tax laws on only non-Indian businesses can no longer be
tolerated nor accepted. The New York Court of Appeals in Snyder v. Wetzler and a
unanimous United States Supreme Court held in Department of Taxation & Fin.
of N.Y. v Milhelm Attea & Bros., that the State may place minimal burdens on
Indian retailers and tribes to collect taxes from non-Indians on Indian Land.
With the exception of actions taken in the Spring of 1997 nothing has been done
to collect this revenue. Some reports have placed this lost revenue in the
billions. Governor Pataki acknowledged the need for legislative approval of his
policy of non-enforcement in his press release of May 22, 1997, where he stated
"Let me make my message to all Indian Nations clear: It is your land, we respect
your sovereignty and, if the Legislature acts as I am requesting, you will have
the right to sell tax-free gasoline and cigarettes free from interference from
New York State." The governor even introduced a bill to effect this change. In a
Buffalo News article dated July 18, 1997 by Tom Precious entitled "Pataki's
sales tax plan for Indian reservations gets pushed aside" that appeared in The
Buffalo News Speaker Silver was quoted as saying that this is a "complex issue"
and that "[b]efore we deal with it, we have to take a significant look at it, so
I don't think anything is going to happen on it this year." Speaker Silver was
correct, in fact nothing has happened for the last 6 years. This despite our
State Constitution prohibition against any tax exemption that is not enacted by
a general law (Article XVI § 1). This section also separately prohibits any
attempt to contract away the power of taxation unless sanctioned by the people
themselves.
A number of times in recent years the legislature passed and
the governor allowed to become law various bills that increased the taxes on
cigarettes and other tobacco products to help fund health care programs in the
state as a result of the ailments associated with such products. However, the
state's policy of non-enforcement undermines this admirable intention.
Although this action may have dire effects on the retailers that are
marketing this form of illegal tax evasion, it does not entitle them to any
consideration. Do we provide compensation or retreat from enforcing existing
laws on drug dealers or money launderers because such enforcement will effect
their earnings? As for the allegations that this measure will not result in
increased revenue for the state because these retailers will close it is simply
not true. Although it will not be reflected in the remittance from the Indian
retailers it will be reflected in the overall revenue remitted for these taxes
to the state. Because the price difference will not be as great there will be
less motivation for smokers to purchase from the Indian retailers rather than
their local non-Indian retailers. This will actually result in a snowball effect
in that the increase in revenue to the local non-Indian retailers will result in
more profit to them and thereby generate higher franchise taxes on the profits
(or less of a tax loss) which will further increase state tax
revenue.
Lastly, as for the threats of violence coming from various
Indian groups. The various Indian governmental entities should be ashamed of the
manner in which they handled this issue in 1997. If they desire to be treated on
a government to government basis they should act like a government. They should
have acted on their own to prevent such violence and to end such violence if it
should occur. That is not to say the protestors do not have a right to speak
their position, but they cannot disturb the peace and act in a violent manner.
If they fail to do this they may be considered condoning this violence against
the state and the President of the United States may be called to invoke his
powers under 25 USC 72 to declare all treaties abrogated with such tribe.
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Source : http://www.prweb.com/releases/2003/5/prweb67284.htm