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The state tax commissioner said Tuesday his agency is moving ahead with regulations to collect taxes on Indian sales of cigarettes and gasoline, a move the head of the Seneca Nation believes will never happen.

Tax Commissioner Andrew S. Eristoff told lawmakers his proposed regulations mirror a similar rule his agency killed last year over the opposition of the State Legislature, health groups and non-Indian retailers.

The new rules, which have not yet been publicly released, are also similar to legislation passed last week as part of the state budget, ordering Eristoff's agency to collect what lawmakers believe is at least $400 million a year in taxes from sales by Indian smoke and gasoline shops and Internet sites. The new budget provision is the third straight year that the Legislature has ordered Gov. George E. Pataki to collect the tax -- an edict the governor, citing Indian sovereignty, has ignored.

In January, Eristoff surprised both sides in the debate by saying his agency was drafting new rules to collect taxes at the wholesale level before the products reach Indian retailers. Some lobbyists saw the move as a negotiating tactic by the Pataki administration in trying to deal with ongoing casino and land claims issues.

On Tuesday, in a hearing on Indian casino and taxation issues, Eristoff said his agency has completed drafting the rules and that they are now under review. It is not clear when they might take effect.

Seneca President Barry E. Snyder Sr., who skipped his planned testimony before the legislative panel on Tuesday, said he believes Pataki will not try to collect the taxes.

"If he's a man of his word, we should have no problem," Snyder said, noting Pataki's longtime public vow not to upset relations with Indian tribes by going after the taxes that Native American leaders say they don't have to pay under long-standing treaty rights.

Snyder said he hopes to meet with Pataki soon to discuss various issues, including the tribe's possible interest in a Catskills casino and the taxation dispute.

"He's held our sovereignty very close. Probably no other governor has recognized as much that the Seneca Nation is a sovereign nation," Snyder said.


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