Jurisdictional Arbitrage, Native American Style
New York’s Oneida Indian Nation moved a cigarette-manufacturing plant to their upstate reservation to shield smokers from steep taxes that Governor David Paterson has vowed to impose.
“By moving the plant to the Oneida homelands, the Nation is availing itself of a long-settled law that recognizes the right of Indian tribes to sell products they manufacture on their own reservations without interference from state tax laws,” tribe officials said in a statement.
New York for more than a decade has tried but failed to force Native Americans to collect cigarette and fuel taxes from their reservation stores. The tribes, who say they do not have to charge the levies because they enjoy sovereign immunity, face another test on September 1, when the state will begin requiring cigarette wholesalers to prepay the taxes before supplying reservation stores.
Michael Strong wrote about leveraging Native American sovereignty into a robust market in governance as part of our Independence Week blogging.