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New tobacco compact with state approved

BY WILL CHAVEZ
Assistant Editor – @cp_wchavez
11/17/2008 06:59 AM
TAHLEQUAH, Okla. – The Tribal Council ratified a new tobacco compact between the Cherokee Nation and the state during its Nov. 10 meeting, ending four years of arbitration talks and negotiations between the two governments.

Councilors unanimously approved the compact, which was signed Nov. 3 by Oklahoma and tribal officials.

The new agreement, now in affect, provides a flat $6.65-per-carton tax on cigarettes and allows for rebates to CN-licensed border smoke shops located within 20 miles of state lines along Kansas, Missouri and Arkansas.

The tribe’s previous compact put non-border smoke shops’ tax rate at 86 cents per pack, with border shop taxes ranging between 31 cents and 6 cents per pack. Under the new compact, which expires June 2013, non-border smoke shops could see cigarette prices drop about 20 cents per pack, while border shop customers could see cigarette prices rise 36 cents to 61 cents. However, under the new compact, border rates expire when a neighboring state raises their tobacco taxes.

With the new compact, Oklahoma gave up its goal of lowering the tax advantage that tribal smoke shops have held over non-tribal retailers, while the tribe agreed to give up low tobacco taxes in border areas. Non-tribal retailers have a tax rate of $1.03 per pack, while shops licensed with the CN have a rate of 66.5 cents per pack.

Principal Chief Chad Smith said he hopes the CN’s tobacco issue with the state is settled.

“It brings to closure the four years of conflict over the existing compact agreement and will conclude the state’s arbitration process,” he said.

The collection of taxes from tobacco sales has also been contentious point between the tribes and the state in recent years. Oklahoma has protested tribally-licensed border shops moving low-tax cigarettes into non-border areas such as Tulsa where shops have higher tax rates.

In the spring, an arbitration panel ruled the CN violated the old compact by allowing retailers to move cigarettes from low-tax rate border shops to higher-tax rate non-border shops.

The new compact contains language prohibiting the retail-to-retail sale of cigarettes and the method used by tribally-licensed retailers to funnel border cigarettes into non-border shops. The compact also slightly increases the tax percentage the state receives.

Under the previous compact, the state collected 100 percent of the tobacco tax and rebated half of those taxes to the CN on a quarterly basis. Under the new system, the state keeps 50 percent of all the tax (including taxes passed before 2004), retaining 51.5 cents per pack. Under the previous compact the state netted 45.75 cents per pack.

Also, under the current system, the wholesalers pay the state’s taxes directly to the state and the tribe’s taxes directly to the CN.

State Treasurer Scott Meacham said Oklahoma wants to increase the amount it is receiving from tobacco sales for health care programs and wants to rid of the border shop versus non-border shop issue and the illegal movement of cigarettes.

Councilors also unanimously approved a resolution to provide a tax rebate to tribal border tobacco shop owners who may be hurt financially when the tobacco taxes rise under the new compact.

The resolution states the CN would rebate some of the taxes to the border stores within 30 days of the tribe receiving them.

Councilor David Thornton commended the administration for negotiating a favorable compact saying he was pleased with compact’s language allowing the CN to take any future complaints with the state regarding the compact to the U.S. District Court if arbitration is not successful.

He also commended the chief and his staff for negotiating a clause allowing the CN to adopt the more favorable conditions or terms of another Indian nation’s tobacco compact.

Thornton said one of the most important items in the new compact was a “forgive and forget” clause, which releases both parties from taxes owed and dismisses the ongoing arbitration.

CN Communications Officer Mike Miller said the CN did not owe the state money for taxes or fines.

Also under the new agreement, the tribe agreed that all retailers licensed with the Cherokee Nation Tax Commission comply with the compact’s provisions, that the state may collect tobacco payment directly from the tobacco wholesaler, that the wholesaler must collect the tobacco payment directly from the retailers and if any retailer purchases cigarettes or tobacco products from an unlicensed wholesaler or fails to comply with any of its obligations the CN shall take necessary enforcement measures to ensure compliance.
About the Author
Will lives in Tahlequah, Okla., but calls Marble City, Okla., his hometown. He is Cherokee and San Felipe Pueblo and grew up learning the Cherokee language, traditions and culture from his Cherokee mother and family. He also appreciates his father’s Pueblo culture and when possible attends annual traditional dances held on the San Felipe Reservation near Albuquerque, N.M.

He enjoys studying and writing about Cherokee history and culture and writing stories about Cherokee veterans. For Will, the most enjoyable part of writing for the Cherokee Phoenix is having the opportunity to meet Cherokee people from all walks of life.
He earned a mass communications degree in 1993 from Northeastern State University with minors in marketing and psychology. He is a member of the Native American Journalists Association.

Will has worked in the newspaper and public relations field for 20 years. He has performed public relations work for the Cherokee Nation and has been a reporter and a photographer for the Cherokee Phoenix for more than 18 years. He was named interim executive editor on Dec. 8, 2015, by the Cherokee Phoenix Editorial Board.
WILL-CHAVEZ@cherokee.org • 918-207-3961
Will lives in Tahlequah, Okla., but calls Marble City, Okla., his hometown. He is Cherokee and San Felipe Pueblo and grew up learning the Cherokee language, traditions and culture from his Cherokee mother and family. He also appreciates his father’s Pueblo culture and when possible attends annual traditional dances held on the San Felipe Reservation near Albuquerque, N.M. He enjoys studying and writing about Cherokee history and culture and writing stories about Cherokee veterans. For Will, the most enjoyable part of writing for the Cherokee Phoenix is having the opportunity to meet Cherokee people from all walks of life. He earned a mass communications degree in 1993 from Northeastern State University with minors in marketing and psychology. He is a member of the Native American Journalists Association. Will has worked in the newspaper and public relations field for 20 years. He has performed public relations work for the Cherokee Nation and has been a reporter and a photographer for the Cherokee Phoenix for more than 18 years. He was named interim executive editor on Dec. 8, 2015, by the Cherokee Phoenix Editorial Board.

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