{"id":11122,"date":"2012-02-26T12:05:18","date_gmt":"2012-02-26T17:05:18","guid":{"rendered":"http:\/\/theredphoenixapl.org\/?p=11122"},"modified":"2012-02-26T12:05:18","modified_gmt":"2012-02-26T17:05:18","slug":"native-nations-make-own-cigarettes-to-avoid-n-y-tax","status":"publish","type":"post","link":"https:\/\/redphoenix.news\/es\/2012\/02\/native-nations-make-own-cigarettes-to-avoid-n-y-tax\/","title":{"rendered":"Native Nations Make Own Cigarettes to Avoid N.Y. Tax"},"content":{"rendered":"
\"\"<\/a>
Cigarettes are manufactured and packaged in the back of the Native Pride smoke shop and gas station, one of the four cigarette enterprises on Seneca land.<\/figcaption><\/figure>\n

By THOMAS KAPLAN<\/strong><\/span><\/p>\n

ONEIDA, N.Y. \u2014 The trucks lumber past cornfields and dilapidated farm houses, pull up to a onetime bingo hall and unload their cargo: boxes of tobacco imported from the Carolinas.<\/span><\/p>\n

Inside, employees of the Oneida Indian Nation dump the shredded tobacco leaves into rolling machines and fashion them into cigarettes to be sold at a dozen tribal convenience stores midway between Syracuse and Utica.<\/span><\/p>\n

The cigarettes, branded with names like Niagara\u2019s and Bishop, sell for as little as $39.95 for a 10-pack carton \u2014 much cheaper than those at non-Indian retailers \u2014 and bring in millions of dollars a year to the tribe, which also has a resort casino, five golf courses and a multimedia production house.<\/span><\/p>\n

\u201cWe tried poverty for 200 years,\u201d the Oneidas\u2019 leader, Ray Halbritter, said in an interview. \u201cWe decided to try something different.\u201d<\/span><\/p>\n

The Oneidas\u2019 cigarette manufacturing business is part of a new strategy that is quickly being embraced among New York\u2019s eight federally recognized Indian tribes. After years of fighting a losing battle against the state over the taxation of name-brand cigarettes sold on reservations, many are now manufacturing their own cigarettes.<\/span><\/p>\n

The tribes argue that because they are sovereign nations, the cigarettes they make are exempt from the state\u2019s $4.35-a-pack excise tax,<\/span> the highest in the United States.<\/span><\/a><\/span> But the tobacco industry and owners of other convenience stores say tribal cigarette manufacturing is just an elaborate form of tax evasion.<\/span><\/p>\n

The administration of Gov. Andrew M. Cuomo, which pursued the legal fight to tax name-brand cigarettes sold on reservations, asserts that New York has the right to tax Indian-made cigarettes sold to non-Indians. But it has done little to test or enforce that claim, leaving the tribes, at least for the moment, free to sell their own cigarettes at cut-rate prices to any and all comers.<\/span><\/p>\n

Some tribes fear that the state could try to intercept trucks ferrying their cigarettes on state roads. The Cuomo administration has thus far opted not to do that, but the State Police and other law enforcement agencies have seized more than 60,000 cartons of Indian-made cigarettes discovered in trucks pulled over for traffic violations over the last eight months.<\/span><\/p>\n

A few Indian entrepreneurs have long manufactured their own brands. Smokin Joes, for example, have been produced on the Tuscarora reservation, near Niagara Falls, since 1994.<\/span><\/p>\n

But the practice is now spreading rapidly. Though the tribes do not release sales figures for their brands, industry experts believe there are now at least a dozen Indian cigarette manufacturers operating across upstate New York, more than in the other 49 states put together.<\/span><\/p>\n

A month before Mr. Cuomo took office, the Cayuga Nation paid $135,000 for a former scrap metal plant in the Finger Lakes region, and last year started producing Cayuga-brand cigarettes, which it offers at two Cayuga-owned stores and also sells to other Indian-owned retailers.<\/span><\/p>\n

And cigarette production is booming on the St. Regis Mohawk reservation in the North Country and at the Seneca Nation of Indians in western New York. There are four cigarette manufacturing enterprises on Seneca land, and around the tribe\u2019s Cattaraugus territory, near Lake Erie, white placards advertising Buffalo, Gator and Senate cigarettes dot the roadside.<\/span><\/p>\n

The Onondaga Nation, with territory near Syracuse, is also considering establishing its own manufacturing operation.<\/span><\/p>\n

J. C. Seneca, a tribal councilor who started selling cigarettes out of a trailer two decades ago, began making his own cigarettes on Seneca land four years ago. His plant, behind a tobacco shop that serves also as a gas station and diner, is a modest operation: his production line requires about a dozen workers, and his equipment, imported secondhand from England and carefully maintained like a vintage car engine, dates to the 1980s.<\/span><\/p>\n

\u201cI always believed that there was another day coming, and I wanted to be prepared,\u201d Mr. Seneca said. \u201cNow, Marlboro\u2019s out, and we\u2019re in.\u201d<\/span><\/p>\n

The Oneidas jump-started their manufacturing efforts by<\/span> buying a private cigarette maker<\/span><\/a><\/span> \u2014 they paid $6.6 million in 2008 for Sovereign Tobacco, which had a plant in an old grocery store in Erie County. The tribe then<\/span> moved the plant\u2019s equipment<\/span><\/a><\/span> to the former bingo hall, a nondescript metal warehouse down the street from the longhouse where the Oneida tribal council holds meetings.<\/span><\/p>\n

For the tribe, which has about 1,000 members, tobacco manufacturing is just one of several business ventures, including the Turning Stone resort and casino, which altogether employ more than 4,500 people in this part of the state. Unlike in some other Indian nations, the Oneida cigarette business is run by the tribe, not private entrepreneurs; the proceeds support programs like college scholarships, housing assistance and a health clinic.<\/span><\/p>\n

\u201cIt\u2019s not what we wanted to do,\u201d Mr. Halbritter, the tribe\u2019s leader, said. \u201cIt\u2019s all we could do.\u201d<\/span><\/p>\n

Mr. Halbritter lamented that tobacco had come to symbolize the tensions over sovereignty. \u201cIt\u2019s sort of a shame that it has to be cigarettes, which is very distasteful to us,\u201d he said. \u201cYet at the same time, the principle is the same, if we were manufacturing whatever it was.\u201d<\/span><\/p>\n

New York\u2019s governors have for years tried, and failed, to collect taxes from tribes for cigarette sales. The sales are substantial; in the first six months of 2011, for example, the state\u2019s Indian nations imported 9.6 million cartons of brand-name cigarettes, according to the State Department of Taxation and Finance.<\/span><\/p>\n

The issue was recast last year when the state won a court ruling allowing it to demand tax payments from the American wholesalers that were supplying cigarettes to tribes for resale. The tribes then stopped buying the name-brand cigarettes and resolved instead to stock the shelves of their convenience stores with their own cigarettes.<\/span><\/p>\n

\u201cPremium-brand untaxed cigarette sales have virtually disappeared,\u201d Edward Walsh, a tax department spokesman, said.<\/span><\/p>\n

The New York Association of Convenience Stores, which had urged Mr. Cuomo to collect taxes on name-brand cigarettes sold by tribes, is now pushing the governor to target Indian brands. \u201cThere remains an enormous tax-evasion problem to be addressed,\u201d James Calvin, the association\u2019s executive director, said.<\/span><\/p>\n

David Sutton, a spokesman for Altria, the parent company of the country\u2019s largest cigarette maker, Philip Morris, said, \u201cAll cigarettes sold to non-Native American New Yorkers need to be tax-paid \u2014 regardless of who manufactures them \u2014 or New York State will continue to lose legitimate and significant tax revenue, and law-abiding retailers will continue to be impacted by cigarette tax evasion.\u201d<\/span><\/p>\n

Howard B. Glaser, the director of state operations for Mr. Cuomo, said the state believed it had the right to collect taxes on the sale of Indian-made cigarettes to non-Indians. But Thomas H. Mattox, the state tax commissioner, said it was \u201cmuch more efficient\u201d for the tax department to focus enforcement efforts elsewhere.<\/span><\/p>\n

\u201cIt\u2019s much easier mechanically to operate at the wholesale level than it would be to literally go store by store, or reservation by reservation, to collect that excise tax,\u201d Mr. Mattox said. \u201cWe really have not talked about on-reservation activities.\u201d<\/span><\/p>\n

The tax dispute has one clear beneficiary: budget-conscious smokers, who in many cases say they are compromising on convenience and the taste of their cigarettes.<\/span><\/p>\n

\u201cThey\u2019re cheap,\u201d said Danielle Silipo, a correctional officer from Rome, who was buying cigarettes the other day at one of the Oneidas\u2019<\/span> SavOn gas station-convenience stores<\/span><\/a><\/span>, which, with their green and yellow color scheme, are ubiquitous in this area. A sign on the door featured the logos of the tribe\u2019s four brands, with the message, \u201cWhy pay more?\u201d<\/span><\/p>\n

Fuente<\/span><\/a><\/span><\/p>","protected":false},"excerpt":{"rendered":"

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