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Updated: 12/4/2008 - 4:17 AM

Smoke shops eyed for county taxes
Bill calls for action against reservation's cigarette sales to general public
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A Suffolk County legislator last week announced that he has introduced a bill calling for Suffolk to take legal action to stop smoke shops at the Poospatuck Reservation in Mastic from selling tax-free to non-tribe members.

Legislator Lou D'Amaro of Huntington at a press conference Thursday said that such sales are “not fair to retailers off the reservation” and complained that the sale of cigarettes at a cheaper price encourages more smoking and increases related health problems.

Harry Wallace, chief of the Unkechaug tribe who is also himself involved in the reservation's tobacco trade, decried the measure saying that Suffolk County was attempting to “piggy-back” on to a lawsuit brought by New York City last month.

“It's a mistake,” said Chief Wallace in an interview Friday. He said outside governments can't “compel Indian sovereigns to collect taxes” for them. He added, though, that “we are open to sit down with government” and discuss the issue. “We want to live in peace,” said Chief Wallace. “We try to develop positive relations.”

He said the cause of the New York City lawsuit and the Suffolk legislation was that “in this financial crisis, they need to blame anybody. We are not to blame.”

The city, in its lawsuit brought in U.S. District Court in Brooklyn, seeks to bar what it says are the eight largest cigarette dealers on the Poospatuck Reservation from selling untaxed cigarettes to non-tribe members. The lawsuit charges: “In making off-reservation sales, including bulk transactions in which defendants sell vanloads of cigarettes on a daily basis which are then trafficked into New York City for resale, defendants grow rich at the expense of tax-paying retailers and city and state taxpayers.”

The D'Amaro bill is titled a “Resolution … Directing the County Attorney to Commence a Sales Tax Enforcement Action Against Poospatuck Indian Reservation Smoke Shops.” It notes that Suffolk County “imposes a sales tax on various retail sales including the retail sale of cigarettes and other tobacco products.”

It says the sale of cigarettes by Poospatuck Indian Reservation smoke shops “to Native American resident-members of the Poospatuck Indian Reservation … for personal consumption” is “not subject to the imposition of the county sales tax” but subject to tax are “all other sales of cigarettes by the smoke shops to individuals or entities.”

The bill declares: “The smoke shops located on the Poospatuck Reservation, which has 279 resident-members, collectively purchased 10 million cartons of cigarettes in 2007 for resale. If they were purchased for resale only to Native American resident-members of the Poospatuck Indian Reservation, exclusively for their own personal consumption, each man, woman and child resident-member of the reservation would have to smoke 960 packs of cigarettes a day.”

The bill says that the sale of “massive quantities of cigarettes to the general public by the smoke shops without the imposition of the county sales tax costs Suffolk County taxpayers millions of dollars in lost revenue.” It also gives the shops an “unlawful competitive advantage over other Suffolk County retailers engaging in the lawful retail sale of cigarettes.”

Under the measure, the county is directed to “institute, or intervene in, any and all legal actions in any judicial and/or administrative forum to recover” sales tax from the smoke shops.

Mr. D'Amaro is an attorney and has a special relationship with the county official who would be in charge of such legal action: his wife, Christine Malafi, who is the county attorney in the administration of County Executive Steve Levy.

The bill now goes to committee for consideration.

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