Oren Lyon’s painting of the Tree of Peace, under which the Haudenosaunee Confederacy was formed many hundreds of years ago.

Taxing Up the Wrong Tree
Ellen Edgerton

The New York State legislature is once again seeking to tax sales of cigarettes from the Onondaga and other Native American nations. In August 2008, both houses of the Legislature passed a new bill calling for collection of taxes on cigarettes sold at Native-owned businesses on Native territories, which would include sales of cigarettes at the Onondaga Nation's store.

New York State's attempts to collect revenue from the Haudenosaunee have had a long and turbulent history. The Haudenosaunee have never consented to the jurisdictional authority of New York State, and have never agreed to allow New York State to impose its tax laws on any transactions conducted within their territorial boundaries.

Taxation Violates Sovereignty
Taxation attempts violate the sovereignty of these Nations and their federal treaty rights. Article II of the 1794 Treaty of Canandaigua guarantees the Onondagas the "free use and enjoyment" of their remaining Territory. New York State claims that various US Supreme Court and lower federal court decisions authorize the collection of state taxes on sales of products to non-native buyers, even when such sales occur on Haudenosaunee territories.

In February 1996, the Pataki Administration gave a 60-day ultimatum for the collection of excise and sales taxes from Haudenosaunee businesses, unless Haudenosaunee governments negotiated other agreements with the State. As diplomatic government-to-government negotiation has historically been the Haudenosaunee approach, the Haudenosaunee negotiated an agreement with the State in the spring of 1997. However, Governor Pataki in May of that year unilaterally canceled the pending agreement before it was signed, and announced that New York State would for the time being suspend its efforts to collect the taxes. The Onondaga Nation worked actively in that process.

Currently, the Onondaga Nation owns one store that sells cigarettes onsite, not through the internet or by mail. The store does not sell gasoline. The Onondaga Nation also does not operate any casinos, and therefore has no revenues from gambling.

Sales Benefit the People
Profits from the store go to the Onondaga Nation government, and fund dozens of programs that benefit the Onondaga people: language programs, home repair programs, annual heat subsidies for each household, repairs of community buildings, maintenance and landscaping of the Nation territory, and sports programs. Hundreds of Onondaga Nation citizens are employed through these programs, and they spend their wages outside the Nation territory, generating an economic ripple in the surrounding communities.

Respecting Onondaga sovereignty and the Treaties and not taxing these sales should be seen as an economic stimulus package for the Central New York economy, very similar to the Empire Zones and the tax breaks enjoyed by other developers in Central New York.

Although some citizen groups in New York have been increasingly vocal over New York's reticence over compelling taxes from the Haudenosaunee and other Native peoples (such as the Poospatuck of Long Island), a 2004 Zogby poll found that 53% of New York voters statewide opposed plans by the State to collect these taxes. In the same poll, two-thirds of the respondents said that they believed taxing goods sold on Native reservations violated the US Constitution. And 72% of those polled reported that they never purchase cigarettes or gasoline from establishments on Haudenosaunee territory. (Source: Zogby International)

This last finding is another confirmation that the estimates of tax revenues generated by cigarette sales are grossly over-inflated by legislators who purport to represent the interests of non-Native convenience store owners. Although State Senate Majority leader Dean Skelos continues to send out press releases claiming exorbitant losses to the state tax coffers of up to $1 billion in revenue, the State Tax Department puts their own estimate at only $70 million.

Despite political pressure for tax collection, Gov. David Paterson has said that he believes negotiations with representatives of New York's Native nations, and not further litigation or the threat of law enforcement, are the best way to collect revenues. Gov. Paterson has asked that the Legislature delay passing the cigarette tax bill to his desk for signature before negotiations have had a chance to begin.

While NOON certainly doesn't support cigarette smoking, we recognize the sovereign status of these nations and call on our government to live up to the agreements embodied in the Two Row Wampum (1613) and the Treaty of Canandaigua (1794). Because each tribal nation's situation is unique, negotiation that respects their sovereignties will build a firm and wise foundation for the many non-taxation issues that remain to be worked on by Native leaders and the State of New York. We call on Governor Paterson to stay on this course in the face of political opposition, and to meet with Onondaga leaders and representatives from the other Haudenosaunee nations before taking any action.



Ellen is a NOON member whose father taught her that some day the Onondagas would seek justice.