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Assemblyman
Brian M. Kolb
Assembly District 131
 
Federal Appeals Court Ruling Brings New York One Step Closer To Enforcing The Law And Collecting The Tax
Legislative column from Assembly Minority Leader Brian M. Kolb (R,I,C-Canandaigua)
May 13, 2011

Right here in our Finger Lakes community – and all across western, central and upstate New York – taxpayers and businesses have been waging a fierce battle. At stake in this battle are fundamental principles such as the rule of law and basic fairness for all, not just a select few. Also at stake is the economic future of countless small businesses that continue following the law, even though their bottom line suffers for doing so. I am proud to be part of a growing, non-partisan coalition of taxpayers and businesses waging this battle to enforce the law, collect the taxes, and level the economic playing field through collecting sales taxes on cigarettes and gasoline sold on Native American lands to non-Native American Indians.

A Fight Worth Fighting: Enforce The Law, Collect The Taxes And Level The Playing Field

This fight has been occurring for nearly two decades and, regrettably, has claimed the dreams and futures of countless local mom-and-pop convenience store operators whose only “crime” was following the law and trying to compete on an unfair playing field. This fight has been especially costly: it has cost our local taxpayers, local governments and state government literally billions in legal fees, lost revenue, closed or bankrupted businesses, and a series of expensive court fights that seem to go on and on with no end in sight. However, earlier this week, with the announcement of a ruling by the Federal Court of Appeals, it appeared as if the battle was over – and the rule of law had finally won the day.

Federal Court: New York Can Begin Collecting Taxes On Cigarettes And Gasoline

On Monday, May 9, 2011, the Second Circuit of the United States Court of Appeals threw out an injunction that had prevented the collection of taxes on cigarettes sold on Native American Lands to non-Native American Indians. The ruling was a HUGE victory and a major triumph for law-abiding, taxpaying citizens and businesses. This issue is personal to me: I have spoken with, and heard from, thousands of area residents who believe, as I do, that state government should have begun enforcing the law, collecting the taxes and leveling the playing field 17 years ago. It was back in 1994 that the United States Supreme Court ruled New York had the authority to collect these taxes. Yet, for 17 years, state government inexplicably sat on its hands.

No Person Or Group Is Above The Law

The Judges on the Second Circuit are correct – no person or group is above the law. The Court’s verdict mirrored what I have been saying all along, that the Native American claims have no merit. The Court dismissed the tribal arguments based on a few key facts and legal principles. First, collecting these taxes does not impose an economic burden on tribal retailers. Second, the system of collection does not interfere with their rights of self-government. Third, while federal law prohibits New York from taxing cigarette sales to members of the tribe, the state can tax cigarettes sold to non-Native Americans. On all counts, the Federal Court got it right.

More Legal Games: Judge Siwek Throws Up Another Roadblock

Unfortunately, there is another twist to this story. The day after the Federal Court of Appeals ruled New York could finally move forward, the Seneca Indian Nation sought to stall the ruling through a temporary restraining order. At the heart of the Nation’s “argument” is their claim – a baseless one, in my opinion – that the State Department of Taxation and Finance moved forward with issuing regulations to collect the taxes without “proper public input.” Keep in mind, not a single penny of sales taxes had even been collected! Yet, for some reason, State Supreme Court Judge Donna Siwek decided this was a sound argument, even though the United States Supreme Court and the Federal Court of Appeals both ruled that taxes could be collected on sales to non-Native American Indians on Native American lands. Add to this the fact that, locally, we have held countless public hearings, solicited pages of testimony, circulated petitions, held press conferences and asked New York’s Congressional delegation for an end to this legal runaround.

Personally, I have spoken to former Governor David Paterson and current Governor Andrew Cuomo on this issue, and sponsored legislation, Assembly Bill A.10128, that directed all cigarette wholesalers to sell only tax-stamped cigarettes to everyone, unless presented with an Indian tax exemption coupon, to allow for the collection of the billions in lost revenue. This bill was introduced properly, following every necessary legal and legislative requirement.

“Legislating From The Bench” Must Stop!

While nobody knows how Judge Siwek will ultimately rule when she hears this case on June 1, the fact that the Seneca Indian Nation continues treating our legal system like some sort of game is troubling. The Seneca Nation’s last-minute legal gambit is like a football team trying to run out the clock – even though they are losing 35 to nothing. It just doesn’t make sense.

Frankly, Judge Siwek’s decision was one of the most shocking instances of “legislating from the bench” that I have ever witnessed. The fact that Judge Siwek stopped the state from moving forward even though the two highest courts in America have ruled in New York’s favor, makes me wonder whether the Judge is trying to interpret the law or make the law. This is a critical distinction! If Judge Siwek wants to make the laws, then she should run for the State Legislature or Congress so she can serve in the legislative branch as opposed to the judicial branch. However, despite the Judge’s ruling, I believe we are close to finally seeing this issue resolved.

As always, constituents wishing to discuss this topic, or any other state-related matter should contact my district office at (315) 781-2030, or e-mail me at kolbb@assembly.state.ny.us.

 
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