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Cigarette tax legislation threatens tribes

WASHINGTON - At an October hearing on a House bill that would facilitate taxation of Internet-based cigarette sales, Congressman Marty Meehan, D-Mass., disavowed any intent to treat tribes differently than others.

H.R. 2824, the Internet Tobacco Sales Enforcement Act, has yet to pass in the House of Representatives. But if it passes as written in 2004, its Indian-specific provisions will have to be reconciled with the Senate version of the same bill, S. 1177.

The Senate passed S. 1177, the Prevent All Cigarette Trafficking Act, by unanimous consent on Dec. 9, its last day before adjourning until Jan. 20 of next year. In the process, with an assist from Sens. Ben Nighthorse Campbell, R-Colo., and Daniel Inouye, D-Hawaii, co-chairmen of the Senate Committee on Indian Affairs, the chamber conceded in effect that for purposes of taxation, tribes simply must be treated differently in some respects.

Tribes are governments, sovereigns within their territories. The system set up in the two bills to administer and collect taxes on Internet-based cigarette sales through state offices cannot properly account for tribes as anything else.

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As the revised final version of S. 1177 indicates, the Senate got this message, as delivered by national Indian organizations, including the National Congress of American Indians, the National Indian Gaming Association, United South and Eastern Tribes and others. The initial version of the bill contemplated state regulation of on-reservation compliance with its provisions. But in the version that passed, Indian concerns were accounted for at many junctures. The words "local", or "Tribal", "locality, or Tribe," were inserted into references that had been state-only in the earlier version.

Above all, a new Section nine includes a slate of Indian-specific considerations, the chief law enforcement officers of tribes are authorized to bring enforcement actions, tribal sovereign immunity from lawsuits is reiterated, and tribe-state tax compacts are shielded from any unintended effects of the law.

The combination of local competition for cigarette sales and state budget deficits has given momentum to the tax-harvesting intent of the bill and its companion in the House.

The version of S. 1177 that passed the Senate Dec. 9, as well as the "introduced" and "reported" versions for the comparison-minded (double-click on Text of Legislation at bottom of the web page), are available on the Internet at