State Senate Finance Chair Carl Kruger knows how to get some much-needed wampum for New York State — tax the cigarettes being sold on American Indian soil.
On Monday, Nov. 16, the Brooklyn pol personally handed Governor David Paterson a request urging him to rescind a “letter of forbearance” that allows American Indian tobacco retailers to avoid collecting the tax on the cartons they sell.
Kruger said that if the state started collecting these taxes immediately, it could generate about $1.6 billion a year — about half of the state’s current $3.2 billion budget deficit. By December alone, the state could be raking in $135 million, he said.
“Every court in this land has ruled that New York has the lawful right to collect the taxes on these cigarettes,” he said. “These taxes are rightfully owed to the state, but the only thing that prevents this is a forbearance letter issued in 2006 by the Pataki administration that the Spitzer administration and Paterson have not rescinded.”
For Kruger, the forbearance letter permitting American Indians to sell untaxed cigarettes isn’t about reparations for the atrocities brought upon the state’s tribal nations.
“This is not reparations, this is taxes due,” he said, adding that American Indians living on reservations, who are exempt from paying taxes, are issued coupons so they don’t have to pay the extra money.
The American Indians aren’t the only ones smoking these butts, he explained.
About 40 million cartons of cigarettes sold by American Indian wholesalers go untaxed each year.
That’s not including out of state and Internet sales, Kruger said, refuting claims that the cigarettes sold on the reservations are for the American Indian’s personal use.
“There are roughly 16,000 identified Native Americans in New York State,” he said. “If they smoked all of the cigarettes that they claim to be smoking then all of them, even the children, would have to smoke 19,200 cigarettes a day.”
Yet not everyone wants to hitch their wagon onto Kruger’s plan, no matter how simplistic it seems.
While Kruger claims that his fellow legislators support the idea, only one showed up at a Nov. 16 press conference in Albany to stand with him.
And while Governor Paterson did receive the letter, he does not seem to be doing anything with it.
Calls for comment were not returned by press time, although some from the governor’s office inferred that Kruger may have been sampling some peyote when he decided to crunch his numbers.
“If people smoked that much there would be a big black cloud over the City of New York that would blot out the sun,” Budget Division spokesman Matt Anderson told reporters.
“There is a big cloud of smoke over this state,” Kruger countered. “It’s coming from the indifference we’re seeing from the executive chambers.
“Nothing should be a sacred cow,” he said.
Surprisingly quiet in this debate are New York’s tribal nations, two of which did not return calls for comment as this paper went to press.
In the past, state officials have been hesitant to rescind the letter, since previous attempts have sparked lawsuits as well as protests by American Indian tribes that one time led to the closure of the state thruway.
Kruger’s plan is one of a handful of revenue-generating ideas — some of which are not as quaint — he’s brought forth over the last week.
On the same day that he called to tax cigarettes sold on native lands, he defended a $1 billion tax surcharge on HMOs that would be accompanied by a cap on how much the insurers could raise their rates to consumers. Critics, including the New York Post, railed against the idea, believing that the additional cost would ultimately trickle down to the consumers.
