NY Senate passes Indian reservation tobacco tax

August 8, 2008 5:33:02 PM PDT
New Yorkers won't be able to avoid the highest cigarette taxes in the nation by shopping at Indian reservations if Gov. David Paterson signs a bill given final approval by the state Senate Friday. The measure requiring a cigarette tax on reservation sales had already passed the Assembly. A spokeswoman in the governor's office said they haven't reviewed the bill yet.

The bill passed during a one-day special session of the Senate. The New York Department of Budget expects an additional $70 million in state revenue if the bill becomes law. Sen. Michael Nozzolio of Seneca Falls, who sponsored the legislation, estimated a $400 million spike in tax revenues.

The American Cancer Society said the new tax could get about 100,000 people to quit smoking.

The measure would require tobacco wholesalers to certify - under penalty of perjury - that they won't supply cigarettes to retailers unless the packs have a legal New York state tax stamp. Wholesalers wouldn't be able to buy from manufacturers unless they provide tax certification.

American Cancer Society spokesman Peter Slocum urged Paterson to sign the bill and enforce it.

The Seneca Indian nation has opposed the legislation, which nation president Maurice John Sr. said would "adversely impact the western New York economy by damaging a $200 million Seneca retailing sector, while violating treaties between the United States and the Nation, is certainly veto worthy."

"The state Legislature should not try to help close its budget gap by denying the right of purchase to the Seneca Nation and its licensed retailers or by jeopardizing the jobs and livelihoods of more than 1,000 Seneca and non-Seneca families involved in our retail economy," John said.

The bill was passed the same day Republicans showed support for Paterson - a Democrat - by backing his proposal to cap local school and government property tax growth at 4 percent a year, unless voters overwhelmingly support more.

"The residents of our state have made it clear they want relief from the crushing burden of local taxes," Paterson said in a written statement. "We will continue to work closely with our partners in the Legislature to control rising property taxes through the passage of a sensible cap."

Despite passing the Senate with a 38-20 vote, the bill faces a long shot at becoming law because of resistance in the Democrat-led Assembly, which favors another approach.

A recent poll found that 78 percent of New Yorkers favor a proposal by the Assembly Democrats to raise income taxes on New Yorkers who make $1 million or more a year.

Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver, says the speaker has never said he is opposed to a tax cap, but has raised concerns about protecting the quality of education in New York.

"I would never do anything to diminish the quality of education in New York," said Senate Majority Leader Dean Skelos, of Long Island.

The Assembly's Democrats prefer a "circuit breaker" that would further subsidize property taxes for middle class and poorer New Yorkers based on income.

"I just think they're out of touch with reality, because they don't understand the crushing burden of property taxes," Skelos said of Democrats in the Senate.

The powerful New York State United Teachers union also opposed the cap, saying it would unfairly limit local taxes used to help students and lower class sizes by hiring more teachers. NYSUT spent more than $4.8 million on campaign contributions in the first quarter of 2008.

"The Senate today chose political expediency and the illusion of property tax relief over a real, meaningful solution - a restructuring of our property tax system based on equity, income and ability to pay," said NYSUT President Richard Iannuzzi in a written statement.

AFL-CIO President Denis Hughes said the tax cap would negatively affect members of the union and harm property values by diminishing the quality of education in New York.

"In a downturn economy this is probably the worst thing you can do ... If we had a progressive income tax the people who have the ability to pay would pay, and those who were unemployed would pay their fair share when they were employed again," Hughes said.

Paterson is still fighting for a tax cap. The governor is calling back the Legislature Aug. 19 for an emergency economic session to consider ways to cut spending by $600 million this year.

By aligning themselves with the popular Democratic governor, Senate Republicans send a message to voters in a predominantly Democratic state that they can work with Paterson.

They also alienate Senate Democrats who largely opposed the tax cap proposal from the governor, who used to lead their minority.

"I think the Senate's advance of the governor's bill puts pressure on the Assembly," said Blair Horner, of New York Public Interest Research Group. "And just because the Assembly now says they don't want to do it doesn't mean they'll say they don't want to do it in the future."

The Senate also passed a bill Friday that would mandate preventive screening for lead poisoning in children and pregnant women. The bill would also offer state tax credits to landlords who update their properties. The bill will be sent to Paterson.

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