The Norman Transcript

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July 4, 2013

Officials push for tax raise on tribal tobacco

NORMAN — Oklahoma officials are pushing to raise taxes on tribal tobacco sales to a level that could reduce or wipe out the competitive price advantage tribal smoke shops have enjoyed for decades.

The effort, if successful, also could make smoking less attractive for Native Americans, who have high rates of smoking and smoking-related illnesses.

Gov. Mary Fallin’s office, however, said the main goal in its negotiations with tribes over of new tobacco compacts is not to improve health outcomes, but to make tobacco taxes more consistent in the state.

In recent months, Fallin’s office has been negotiating the compacts with nearly all of Oklahoma’s 32 federally recognized American Indian tribes.

So far, five tribes have agreed to new deals: the Kaw, Cheyenne and Arapaho, Otoe Missouria, Apache and Fort Sill Apache tribes. The Muscogee (Creek) Nation’s compact is not expiring.

Agreements with the other tribes were to expire on June 30, but the state has granted a three-month extension to 22 tribes with which it is negotiating, said Fallin’s General Counsel Steve Mullins. A handful of tribes are not in negotiations.

Because tribes are sovereign entities and cannot be taxed, they remit a payment in lieu of taxes to the state via wholesalers.

There are five different tax rates among tribal retailers. Smoke shops within 20 miles of the border with Kansas or Missouri charge either 6 or 26 cents per pack; those outside the 20 miles charge 43 cents, 51.5 cents or $1.03 per pack.

Non-tribal retailers charge $1.03 per pack.

The state wants to gradually set all tribal taxes at $1.03. That would mean no retail store in Oklahoma has a tax advantage. In return, the state would rebate to the tribes half of the taxes charged at retail outlets on their lands.

“Basically, at the end of five years, in Oklahoma almost every tribe will be at that rate,” Mullins said. “They will buy a (tobacco) stamp for $1.03, but we will refund one half that amount of money. All cigarettes sold in Oklahoma will be sold at $1.03.”

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