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Senate committee passes PACT Act to extinguish Indian mail order tobacco trade

WASHINGTON – A Senate committee has approved a proposed bill that the Seneca Nation says would significantly impact its tobacco-based economy, its citizens, employees, and the financial well-being of western New York state.

The Senate Judiciary Committee passed the Prevent All Cigarette Trafficking Act – PACT – Nov. 19. No date has been set for a full Senate vote, but if passed the PACT Act would prohibit the U.S. Postal Service from delivering cigarettes and certain other tobacco products, effectively putting Indian-owned mail order tobacco businesses out of operation.

The U.S. Postal Service is the only remaining delivery system open to Indian-owned mail order tobacco businesses. A few years ago, the National Association of Attorneys General, led by former New York Attorney General Eliot Spitzer pressured UPS, FedEx and DHL to sign “voluntary” agreements not to transport tobacco.

Versions of the PACT Act have been proposed annually for several years, usually introduced by New York legislators. The effort is part of the state’s ongoing tobacco wars in which various governors and state legislators so far have been unsuccessful in trying to force tribes to collect tobacco and other taxes on behalf of the state.

The Seneca Nation is regarded as having perfected the mail order tobacco trade business model. It has a state-of-the-art stamping and enforcement mechanism that ensures compliance with a rigorous set of internal regulations, including retailer authorization, minimum pricing and a ban on sales to minors. Revenue from a 75 cent per pack levy is used to provide health, education and other social services for nation citizens.

Passage of the PACT Act could result in up to a 65 percent loss in import/export revenue to the nation along with a projected job loss of 1,000 Seneca and non-Seneca positions, Seneca Nation President Barry E. Snyder said in a prepared statement following the Senate Judiciary Committee’s approval of the bill.

“At a time of record unemployment in western New York, Phillip Morris and the Senate Judiciary Committee, acting as this holiday’s Grinch, voted to steal 1,000 jobs from our nation and the western New York community,” Snyder said. “And this all comes just days after I heard how President Obama wants to help Indian country during American Indian Heritage Month. To be clear, the PACT Act is about a big corporation using the federal government to line its pockets by increasing its market share.”

The Seneca Nation has long fought both state and federal lawmaker’s attempts to collect taxes on tobacco and gasoline products sold by Indian nations. According to Snyder, the PACT Act is a direct contradiction of President Obama’s statement to “reverse the U.S. government’s history of marginalizing and ignoring the plight of Indian nations.”

Snyder’s mention of Philip Morris refers to the tobacco giant’s enthusiastic support of the PACT Act for its potential to undercut – or eliminate – Indian tobacco sales. Last year, Philip Morris spokesman Dave Sutton said the company is “proud to support” the PACT Act.

“The sale of untaxed and under-taxed cigarettes and smokeless tobacco products remotely – via the Internet, mail or phone – harms legitimate wholesale and retail businesses, consumers and government budgets.” Sutton said.

Seneca, however, works in close partnership with the federal Bureau of Alcohol, Tobacco and Firearms Enforcement to battle illegal tobacco trafficking.

“We agree with the fundamental goals reflected by the PACT Act, that no one should be engaged in illegal cigarette smuggling. But cigarettes are a lawful product and this PACT Act is nothing but a money grab by Philip Morris to destroy legitimate, treaty-sanctioned American Indian commerce,” Snyder said. “Senators supporting the PACT Act, especially the New York senators, should ask themselves why are they letting Philip Morris take jobs and money from the Seneca Nation and the western New York economy?”

The House version of the PACT Act was sponsored the past two years by Congressman Anthony Weiner, D-N.Y. Congress passed the bill May 21 by 397-11.

The Senate bill was introduced on the same day by Sen. Herb Kohl, D-Wis., a Senate Judiciary Committee colleague of Sen. Charles Schumer, D-N.Y., and co-sponsored by Schumer and Sen. Kirsten Gillibrand, D-N.Y., among others. Last spring, the New York Times revealed that Gillibrand represented Philip Morris in the mid-90s in its efforts to block the Justice Department from obtaining evidence that tobacco company executives had lied about the negative health effects of smoking.