Copyright 2003 - Thursday, October 23, 2003

Oneidas, state considering deal to collect taxes

By WILLIAM KATES

The Associated Press

SYRACUSE - The Oneida Indian Nation has almost completed a deal with the state that would allow the tribe to collect taxes on cigarettes and gasoline sold to non-Indians and keep it for tribal government services, a tribal attorney said Wednesday.

The state would not receive any tax money under the deal. However, the taxes charged by the Oneidas would be equal to state taxes and would reduce - although not eliminate - the tribe's competitive advantages over non-Indian retailers, said tribal tax attorney Eric Facer.

"After 18 months of negotiations, we are very close to wrapping this up with a written agreement. There are no major outstanding substantive issues. It will be before Dec. 1," Facer said.

Beginning Dec. 1, the state is scheduled to begin collecting taxes on cigarettes and gasoline sold to non-Indians on Indian land. The tax will be imposed on wholesalers, who will collect it from retailers. Under the new tax regulations, if a tribe reaches an agreement with the state, it would be exempt from turning over the taxes.

"What we are talking about is hardly a revolutionary idea," Facer said. "There are dozens of other tribes in states across the nation that have reached such agreements."

Gov. George Pataki and the Mohawk Nation reached a similar agreement in May, but that has since been thrown into limbo following the election of new chiefs on the northern New York reservation. The Cayuga Indian Nation of New York made a similar offer in a letter to Pataki last week.

The governor's office did not immediately return phone calls Wednesday seeking comment.

The Oneidas operate 12 combination gasoline station-convenience stores and two cigarette shops in Oneida and Madison counties. The tribe also owns Turning Stone Casino, which has reported profits of $30 million annually.

The tribe has not released revenue or profit figures for its cigarette and gasoline sales.

Facer said the nation would lose millions of dollars in sales as well as market share because it would no longer have a big price advantage over non-Indian retailers. He said the gain in taxes - which he estimated at "seven figures" - would not be enough to offset the loss in revenues.

Although it would receive no tax money from the Oneidas, the state would still benefit because it would be collecting tax money on the increased sales at non-Indian stores, he said.

Some people now drive 20 to 30 miles to take advantage of the Oneida's significantly lower prices. If there is less savings, some shoppers will decide it is no longer worth it to make the drive and instead buy from local merchants, Facer said.

Facer said imposing a tribal tax equal to state taxes would raise the nation's retail prices on cigarettes, which are about $10 less per carton than non-Indian retailers, to within $2 or $3 of those retailers.

Gasoline prices would go up, too, but Facer said he didn't know how much. Prices at the Oneidas' gas stations generally fall within 10 cents of non-Indian service stations.

The agreement also would include a number of "protective components" for the state, including minimum threshold prices for fuel and tobacco sold by the Oneidas.

The state also would have the authority to audit the nation's books to make sure the tax money was being used for government services and programs and not being invested into Oneida business ventures, Facer said.