No resolution of New York's Indian sales tax issue this year

By Carolyn Thompson
Buffalo, New York (AP) 11-07

Gov. Eliot Spitzer’s administration has no plans to begin collecting sales tax on Indian cigarette and gasoline sales this year and has written $200 million in projected revenues out of the budget forecast.

It will be at least next April before the state sees any revenue from the sale of goods by Indian retailers to non-Indian customers.

“We’re not going to be precipitous,” Spitzer said, citing legal and treaty considerations. “We’re going to do it in an appropriate timetable.”
The development outraged convenience store owners who had high hopes with the election of Spitzer – the former attorney general – that an issue that has vexed them for years would soon be resolved. The retailers estimate they lose hundreds of millions of dollars in gross sales every year to tribal businesses that can offer cheaper products on reservations and over the Internet.

“(Spitzer) promised during the campaign and vowed in the early days of his administration to follow through and restore the level playing field for all retailers of tobacco and motor fuel,” said James Calvin, president of the New York Association of Convenience Stores.

“Here we are, 10 months beyond `day one’ and there’s still no movement in sight to the issue of tax collection,” he said, referring to Spitzer’s campaign motto to change everything on “day one.”

Indian tribes say their status as sovereign nations shields them from having to collect sales tax for the state. New York’s attempts to collect tax a decade ago led to violent clashes between state police and the Seneca Indian Nation, an 8,000-member tribe that shares part of its revenues from three western New York casinos with the state.

Spitzer said he is in discussions with tribes to resolve the issue.

“We commend the governor for honoring Seneca Nation sovereignty, and we are proud to be able to make our annual payments to the taxpayers of New York State from our gaming facilities in Salamanca, Niagara Falls and Buffalo,” Seneca President Maurice John said.

On Tuesday, Spitzer’s budget office said a decline in tax revenues in a slowing economy will result in a $4.3 billion budget deficit, $651 million higher than projected in July. The office erased a $200 million revenue projection from reservation gasoline and cigarette sales for fiscal 2007, but has included $150 million in projected revenues for fiscal 2008, which begins April 1, Spitzer spokesman Jeffrey Gordon said.

Associated Press Writer Valerie Bauman contributed to this report from Albany.