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Collect tax from non-Indians State still needs to clarify process to meet court rulings on treaty issues

Gov. Eliot L. Spitzer is following through on another campaign promise, declaring that the state will move to collect taxes on cigarettes sold by Indian retailers to non-Indians.
The move will be controversial, especially within Western New York's Indian nations, but the state inappropriately loses hundreds of millions of dollars a year in tax revenue because of those sales. Plus, it's the right thing to do.

The State Legislature passed a law in 2005 to require those tax collections, but former Gov. George E. Pataki, perhaps recalling violence during a first-term tax collection effort, never enforced it.

Earlier this month, a state judge issued a preliminary injunction against enforcement, but Spitzer, a lawyer of some note, believes the state can "make moot" the problems cited in the judge's ruling.
We hope he does. Native Americans operating on sovereign land hold some hard-won protections against certain taxes, but they are not limitless and even when they are legitimate, they put non-Indian merchants -- mainly of cigarettes and gasoline -- at a severe disadvantage. For their sake, and that of state taxpayers -- who must make up tax revenue losses -- it is important that these exemptions be restricted to the places and people for which they are legally intended. This is also a health issue, with the Internet allowing for cigarette sales far from reservation stores and often to minors.
The key to resolving the judge's objections appears to be in meeting one of the requirements of the 2005 law: coupons given to Indians who qualify for the tax exemptions. As of today, those coupons don't exist, meaning the state cannot enforce the law, Judge Rose Sconiers ruled.
However Spitzer pursues this effort, it is certain to be contested in court. Lawyer Joseph Crangle, who represents Seneca business owners, argues that the state lacks civil regulatory authority over sovereign Indian territories, for example.

But all that means is that the matter needs to be clarified, and the only way to do that, and potentially collect hundreds of millions of lost tax dollars, is to start the process. Spitzer says he will do so. It's worth the effort.

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