Cigarette tax again blocked

HOGANSBURG — A victory Monday for the state in federal court over its plan to collect a $4.35 per pack tax on cigarettes sold by Indian tribes, including the St. Regis Mohawks, was short-lived as a state Supreme Court judge in Buffalo on Tuesday temporarily blocked implementation of the plan for at least three weeks.

State Supreme Court Judge Donna M. Siwek’s order will remain in place until she hears arguments June 1, when the Seneca Nation of Indians will make its case that the state adopted the regulations hastily and without required public comment. The state attorney general’s office opposed the request.

The ruling comes a day after the U.S. Court of Appeals for the 2nd Circuit in Manhattan lifted the order that blocked the state from collecting the tax. The state estimated it could raise up to $200 million a year from the tax. Gov. Andrew M. Cuomo had planned to begin collections immediately.

Leaders of the St. Regis Mohawk Tribe remained silent Tuesday before the state judge’s decision, and declined comment Tuesday evening because they had not seen the latest decision.

Before Tuesday’s ruling, several smoke shops on the St. Regis Mohawk Reservation were talking about halting the sale of major-brand cigarettes on their reservation in favor of native brands manufactured on the reservation, which remain tax-exempt.

Ashley R. Mitchell, a manager at AK Gas & Tobacco, 1569 Route 37, said Tuesday they would turn away the distribution truck carrying the major-brand cigarettes should the state start collecting the tax. The convenience store offers customers free samples of the native brand cigarettes near the cash register.

“We have a lot of customers that come and buy our cigarettes already,” Ms. Mitchell said. “We’re just going to have to start selling our own cigarettes.”

Sherry Cunningham of Grace & Allens, 1631 Route 37, said the smoke shop would shut down if the state moved forward with its plan. The store has six employees, some of whom work several jobs to support their families.

“Being a sovereign nation, there should be no tax,” Mrs. Cunningham said. “If they tax us, some places will go out of business.”

A meeting was planned later this week with the Akwesasne Convenience Store Association to discuss the federal court ruling, smoke shop workers said.

Jody Swamp, owner of the Broken Arrow smoke shop on Route 37, said his operation would not be affected because the store sells only native brand cigarettes. He decided a few years ago to stop selling major-label brands.

“We don’t need the state’s involvement in it,” Mr. Swamp said.

The Mohawks, in their federal lawsuit, argued that the plan violated their federally protected rights and would force the tribe to discard its own regulatory system to enforce the state’s plan.

The three-judge federal appeals panel said in court papers Monday that the Mohawks, Senecas, Cayugas, Oneidas and other tribes challenging the tax-collection system, in which wholesalers who sell to the tribes would pay the tax, does not place “an undue and unnecessary economic burden on tribal retailers.”

The judges also noted that state officials had created a coupon system in which members of Indian tribes can buy tax-free cigarettes.

Two tobacco wholesalers, Day Wholesale at Tupper Lake and Capital Candy Co. in Barre, Vt., did not return calls Tuesday for comment. Both businesses supply smoke shops on the St. Regis Mohawk Reservation.

By DAVID WINTERS

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