Authorizes the state to negotiate a cigarette tax revenue sharing plan with tribal entities and creating an Indian reservation tobacco tax revenue fund

5 Co-sponsors

• Ruben Diaz
• Shirley L. Huntley
• Craig M. Johnson
• John L. Sampson
• Toby Ann Stavisky

Title of bill

An act to amend the tax law, in relation to providing for the sharing of tax revenues from both excise and sales and compensating use taxes with Indian tribal councils having jurisdiction over Indian reservations from sales of cigarettes occurring on such Indian reservations; and to amend the state finance law, in relation to establishing a fund for the management of certain tax revenues

Purpose

Authorizes the state to negotiate a cigarette tax revenue sharing plan with tribal entities and creating an Indian reservation tobacco tax revenue fund.

Summary of provisions

Section 1 amends section 482 of the tax law to authorize the governor and the tax commissioner to enter into negotiations with tribal entities for the purpose of collecting cigarette taxes on reservation sales to non-tribal customers and authorizes the payment of one-half of the amount collected to be paid to participating tribes.

Section 2 adds a new section 92-ff to the state finance law establishing an Indian reservation tobacco tax revenue fund to receive tribal shares of cigarette taxes collected pursuant to agreements with the state.

Justification

The state is currently losing an estimated $450 million per year in uncollected cigarette tax revenues from bootleg and cross-border sales. $270 million of those losses are directly attributable to cigarette sales from reservation-based sellers to non-tribal customers. The US Supreme Court upheld New York's legal right to collect taxes on sales to non-tribal consumers in 1994 in its Attea decision, but thirteen years later the tax is still not being collected.

Many other states have negotiated revenue-sharing plans with Native American tribes to facilitate the collection of cigarette and other taxes on reservation sales, and New York should consider doing the same. Even with half of the collected cigarette taxes going to tribal governments, New York State would still come out ahead because eliminating the unfair price advantage that tribal sellers currently enjoy would dramatically reduce the opportunities for tax evasion as well as buyers' incentive to patronize remote reservation sellers.

Legislative history

Similar to A.9699A of 2000 - Held in Assembly Ways and Means Committee 2008 - S.4171 - REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Fiscal implications

Revenue generating.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become a law; provided that the commissioner of taxation and finance and the state comptroller are authorized to promulgate any and all rules and regulations and take any other measures necessary to implement this act on its effective date or before such date.