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Indian protests of cigarette tax law limited for now

Operators of smoke shops on Indian reservations are blaming the state for recent increases in the prices they charge -- but the protests were limited to a few signs Thursday.

If smokers are worried about a shortage of tax-free cigarettes, it wasn't evident at the smoke shops on the Cattaraugus Indian Reservation, where more clerks than customers were in evidence during a visit.

Two of the four shops visited had signs saying there was a $5 increase for a carton of cigarettes. But only one, First American Tobacco, was restricting sales with a five-carton limit. A clerk said no more cigarettes would be arriving, but she didn't know why.

At Seneca One Stop, customers with complaints about the $5 increase for a carton and $1 for a pack were advised to take it up with Attorney General Eliot Spitzer. "It's out of Seneca One Stop's hands," according to the sign.

At Seneca Hawk and Triple J's, there were no indications that prices had risen or of any limits on sales.

At the Tuscarora Reservation in Niagara County, Randy's Smoke Shop sported a handwritten sign saying, "Price Increase. Due to NYS Government. There Are No More Cigs Coming In. This Is It. You Can Thank Your NYS Government."

Another sign said there was a one-carton limit until further notice.

The tension on the reservations stems from a new state law that kicked in March 1 requiring wholesalers to pay state excise taxes -- $1.50 per pack -- on cigarettes they ship to Indian retailers to be sold to non-Indians. But Gov. George E. Pataki's administration, which for a decade has fought efforts to collect the tax, said it would not have its tax department enforce the new law while Pataki tried to negotiate with legislators for a one-year delay.

But Spitzer warned wholesalers that, despite the Tax Department's decision, the law is in force and they risked prosecution if they continued selling tax-free cigarettes to Indian retailers. And this week, the State Legislature said it would not go along with Pataki's call to delay the law until after he leaves office at the end of the year.

In response, wholesale tobacco executives say at least several companies, fearing legal consequences, have stopped shipping to the Indian-owned retailers. Only one tobacco company, Attea Milhelm & Bros., has confirmed a suspension of sales.

On Thursday, the Pataki administration did not comment on the latest wrangling. State Police were monitoring the situation as Tax Department lawyers met through the day to figure out a next step for the state to take.

Wholesalers have asked the tax agency to make clear that the law doesn't yet apply because of Pataki's decision to delay enforcement; Spitzer said the tax agency can't do that because the law is already on the books.

At the Allegany Reservation near Salamanca, tobacco merchants and other Senecas met Wednesday night and did a lot of "venting," according to sources.

There was talk of blocking highways and also of launching a public relations campaign against Spitzer, they said. Some of the tobacco Web sites were down or had messages saying "Internet Store Closed."

Includes reporting by Staff Reporters Michael Beebe and Gene Warner and Tom Precious of the News Albany Bureau.


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