Indian tribes lose federal appeal

A federal appeals court vacated an injunction Monday that blocked the state from collecting a $4.35 per pack tax on cigarettes sold by Indian tribes, including the St. Regis Mohawks.

The U.S. Court Appeals for the 2nd Circuit in Manhattan issued its ruling, overturning a lower court's decision that had been sought by the Mohawks and other tribes.

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

The decision appears to allow the state to begin collecting the tax while legal challenges are considered, including an appeal to the U.S. Supreme Court. The state estimated it could raise $200 million a year from the tax.

"Today's decision respects tribal rights and at the same time represents an important victory for the state to collect deserved revenue and to protect public health," state Attorney General Eric T. Schneiderman said Monday in a prepared statement. "The decision closes an enormous tax-evasion loophole that was depriving New York of hundreds of millions of dollars in tax revenue."

The Mohawks' lawsuit challenged amendments to the state's tax law that were enacted in June and the emergency regulations declared by the state Department of Taxation and Finance in an effort to implement those provisions.

"We conclude that none of the plaintiffs has demonstrated a likelihood of success on the merits," the appeals court said in its 53-page decision.

The three-judge panel said in court papers that the St. Regis 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 trial retailers."

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

David T. Staddon, public information director for the St. Regis Mohawks, did not have a comment Monday on the decision. The Tarbell Management Group, which oversees several convenience stores and a tobacco shop on the reservation, along with distributing native brand cigarettes, also declined to comment Monday.