Potential president submarined

Page 6

New York State Governor George Pataki wants the Republican nomination for the next United States presidential election. Recent events involving the issue of tax collection on sales of tobacco and gas to non-Indians by Natives living on reservations in New York State have probably assured that he will not get it.

It is a rule of political thumb, both in the United States and Canada, that Native issues must not be allowed to become national or international issues that might impinge on an election. This was most recently demonstrated in Canada where during the latest federal election Native matters were almost completely ignored.

If nominated for president, Pataki would find it impossible to avoid the tax issue on the national stage of two countries, breaking the aforesaid rule in both Canada and the United States. He will not be nominated, because events do not bear scrutiny.

The inescapable factors are these:

1. Legitimate Native leaders in Ontario, Quebec and New York State have long been concerned that incredible profits by a few Native individuals in tax-free sales to non-Indians and in smuggling threaten reserve governments. A small group of self-described Native businessmen as well as a notorious warrior society have tried repeatedly to oust Native governments throughout the past three decades. Their motive, say the legitimate leaders, is merely the protection of individual profits, the 'American Way' that most traditional Natives eschew.

2. An association of non-Indian convenience stores, charging that Natives have unfair business advantage in selling tax-free, won a New York State Supreme Court ruling two years ago that the state must collect sales tax on purchases by non-Indians who do not enjoy tax-free rights by treaty. The ruling was later upheld on appeal with the added stipulation that if the state does not collect, no one at all in the state can be made to pay sales tax.

3. Initial attempts by the state to negotiate with Native businessmen failed miserably and Pataki (perhaps foreseeing the violent opposition that could result) delayed deadlines for collection twice before turning to the traditional chiefs of five New York Indian nations. Talks began in July 1996 and Pataki postponed his deadline twice more because talks were "meaningful." An agreement was eventually reached and acted upon April 1.

The agreement did not provide for tax-collection, but rather recognized Native sovereignty as distinct nations, protected Native tax-free rights, and provided for a near-parity of gas and cigarette prices with the difference between the previous tax-free price and the new near-parity price going to the Indian nations for programs and administration. No taxes would ever be paid to New York State.

It was a trade and commerce agreement wherein Native gas and tobacco industries would be regulated by the governments of their territories. This would have prevented rich individuals from seizing political control of reserves through the power of their personal fortunes. Legitimate chiefs throughout New York State were almost unanimous in their claims that such protection from individual Native entrepreneurs is necessary.

The reason why was quickly clear. Violent opposition to the April 1 agreement broke out at Seneca Nation, south of Buffalo, N.Y., and elsewhere almost immediately. Gas and tobacco outlet employees along with non-Indian supporters, clashed with police, set tire-fires, blocked the New York Thruway, hurled rocks from overpasses at night, spread nails on pavement and marched off in protest to Albany and Washington.

On April 24, the home of Chief Leo Henry at Tuscarora Indian Reservation, near Niagara Falls, N.Y., one of the nations signing the agreement, was firebombed. Three more burnings occurred at Tuscarora and Onondaga, near Syracuse, N.Y. A further clash between protesters and police at Onondaga was marked by the arrest of Art Montour Sr. and Paul Delaronde, both major figures in the no largely discredited Mohawk Warrior Society. (Montour was sentenced to two years in jail for obstructing justice in 1989 while supporting gambling at Akwesasne, a reservation straddling the Canada-United States border near Cornwall, Ont.)

4. Seneca gas and tobacco operators went to court and won a ruling whereby the method by which Pataki sought to resolve the tax issue was illegal. Tax enforcement officers had seized two tanker-trucks bound for the reserve. They were forced to release them. The state rushed to appeal, but a stay, normally ordered in such cases, was not imposed this time. Gas and tobacco were free to flow as before and have been flowing ever since.

5. On May 22 only days after the devastating court ruling, Pataki caved in. Citing a wish to protect police and avoid violent protest, he said he was directing his tax department not to try to collect. Additionally, he said he was introducing a bill in New York State Legislature to legalize tax-free sales to non-Indians. Native chiefs were shocked, some believing that they had been betrayed, that Pataki had backed down from terrorism.

6. The legislature balked and political pundits predicted the bill would never pass, pointing as proof to the poor legislative record the assembly had for the year, passing only a very few proposed laws. There is little hope that legislators will get to Pataki's bill any time soon, if at all. This was not bad news to Seneca Nation, however, since without a stay on the illegality ruling, their businesses could proceed as before unimpeded in sales to non-Indians.

7. Dire predictions were made by traditional chiefs and their supporters, charging that tobacco, alcohol, gun and drug smuggling (fueled by the immense unregulated New York Native gas and cigarette profits) will increase, become entrenched and impossible to combat, and all because of Pataki's amazing about-face on the tax issue.

Even more amazingly, only a month before, both Ontario Attorney General Robert Runcian and the then federal Solicitor General Herb Gray in Canada announced the formation of a special joint police group based in Cornwall, Ont., to fight gun-running and organized crime with national and international connections. At virtually the same time, Loran Thompson, living on the New York State side of Akwesasne, another former major figure in the Mohawk Warrior Society (of Oka fame), was arrested by the RCMP as the king-pin ("the top of the ladder") in a major alcohol and tobacco smuggling operation.

There is already a special police task force in Cornwall, formed in 1994, that targets all kinds of smuggling from guns and drugs to booze and tobacco. All are expecting more work as a result of events in New York State.

Also, the Buffalo News reported in November 1996, (months before Pataki's flip-flop) that serious interstate cigarette traffic originating at Seneca Nation, south of Buffalo, is going to Michigan, a major new smuggling corridor, where high state taxes make for huge profits on totally untaxed cigarettes.

Michigan authorities estimate, according to the Buffalo News, that they have lost $144 million since tripling their taxes in 1994 to $7.50 U.S. a carton. They assert that a third of the untaxed cigarettes responsible for this loss came from three Indian nations in western New York State. New York tax enforcement officers agree, but say they can do little to stem the flow, and nothing if Pataki succeeds in making the traffic legal.

In summary, it is clear that Pataki's decisions on the non-Indian tax issue on reservations in his state have ramifications far beyond reservation and state boundaries.