DENNIS C. ENSER/Buffalo News
This kiosk in a Yellow Goose market
- used by Sue Medina links to an Oneida
Indian Nation Web site.
Posted on 04/03/2002 5:48:22 AM PST by Phantom Lord
Indian kiosks put tax-free cigarettes online
DENNIS C. ENSER/Buffalo News
This kiosk in a Yellow Goose market
- used by Sue Medina links to an Oneida
Indian Nation Web site.
An Indian nation from Central New York is placing tobacco kiosks in some Buffalo-area convenience stores that will allow the electronic mail ordering of tax-free cigarettes at a savings of up to $20 a carton. The move, a first according to industry officials, came Tuesday, the day before today's 39-cents-per-pack state tax increase. That increase brings the total state tax on a pack of smokes to $1.50, the highest in the nation.
The Oneida Indian Nation, the nation that operates the Turning Stone gambling casino at Verona, installed its first Internet-based tobacco kiosk in the Yellow Goose convenience store on Colvin Avenue, the first of six planned installations.
Critics called it an obvious bid by the Oneidas and Yellow Goose to help smokers skirt today's tax increase.
And officials with State Attorney General Eliot L. Spitzer's office immediately pointed to potential legal problems because the kiosks could permit minors to buy cigarettes illegally. Furthermore, they claim, the plan may violate state tax laws by using a non-Indian-owned retail outlet as a conduit for selling tax-free cigarettes.
The marketing technique uses a touch-screen computer to allow smokers with a credit card to order most major cigarette brands tax-free from the Oneidas' Internet-based tobacco company near Utica.
"This raises serious questions about the legality of the operation, and any retailer should think twice before installing one of these in their store," said Marc Violette, a Spitzer spokesman.
Oneida officials said they informed the Pataki administration in advance about their plans. State Tax Department officials declined to say if they were concerned about similar operations popping up across the state.
"We're aware of the situation, and we're looking into it," said Marc Carey, the agency's spokesman. He would not say if his office thinks the kiosks might violate state law.
Using touch-screen technology like clerks use in fast-food restaurants, the smokers tap the screen to choose a product. A simulated keyboard then pops up to permit the customer to enter credit card and address information. Orders are usually received within a few days.
Customers using the kiosk's computer are linked to a Web site run by the Oneidas that sells 52 brands of cigarettes - all free of state taxes. At the Oneida Web site, cigarette prices listed Tuesday were significantly below what smokers would spend at a non-Indian-owned retail outlet. The site sells brands from Kools, at $27.50 per carton, and Marlboros, at $33.50 per carton, to its cheapest brand, Grand Palace, at $10.50 per carton. There are 10 packs in a carton.
Mark S. Sidebottom operates the 33-store chain of Yellow Goose stores in Western New York. He refused to say Tuesday what financial incentive his company is receiving from the Oneidas for the kiosks' placement. Sidebottom did say the kiosks will be installed in five more stores, "and if they are successful, we will put them in all our stores."
The Oneidas and Sidebottom defended the system from critics who believe it may not be legal to permit non-Indians to purchase cigarettes from an Indian tobacco distributor but at a non-Indian retailer.
"They really aren't any different than ordering cigarettes from the Oneida Indians from your home," Sidebottom said. "We simply are providing a service for those customers who don't have computers in their home."
The cigarettes are sent from the Oneida Nation's distribution center on its reservation near Utica. Jerry Reed, an Oneida spokesman, said an Oneida-owned company also makes the kiosks.
The Oneidas say that, as a sovereign tribe, they did not need state approval for the new tobacco venture.
The timing of the move by the Oneidas is curious. The tribe is actively working with the Pataki administration to try to settle a long-standing land claim in Central New York and to expand its existing casino operation - Turning Stone at Verona - into the Catskills.
Yet, observers at the Capitol say, the bid to help more smokers evade state sales taxes can only embarrass the Pataki administration, which has already been taking a hit over the years from non-Indian retailers for failing to collect taxes on reservation sales of tobacco and gasoline to non-Indians.
The governor has fought attempts by non-Indian retailers to force the state to collect taxes on cigarette sales at reservation stores. The state did try to slow Internet sales of tax-free cigarettes by making it a crime for companies such as United Parcel Service to deliver cigarettes without a state tax stamp. But that law, which advocates say was needed to cut down on cigarette sales to minors, was struck down by a federal judge last year.
The Oneidas' bid to place the kiosks in an initial six Yellow Goose stores occurs in a region the Seneca Nation of Indians already considers its prime marketing area for tax-free cigarette sales. Seneca President Cyrus M. Schindler was unavailable to comment Tuesday.
After years of complaints by non-Indian tobacco retailers about the unfair advantage of Indian-owned stores, industry officials and anti-smoking groups say Yellow Goose has taken a simple approach: If you can't beat them, join them.
Retailers say a state policy that has sharply increased cigarette sales taxes over the past few years has cut sharpely into revenues of non-Indian stores. They say they can't compete in an environment that is pushing many smokers to buy cigarettes across state borders. Pennsylvania's tax, for instance, is 31 cents per pack.
The head of the trade group for convenience stores in New York said the new cigarette sales tactic by Yellow Goose is a first in the state.
"It's a reflection of the dire situation that convenience store operators are faced with under the state's tax policy," said James Calvin, executive director of the New York Association of Convenience Stores.
His group found, using state data, that tax-collecting retailers sold 51 million fewer cartons of cigarettes over a two-year period since the last tax increase in 2000, with much of that being picked up by cross-border and Indian sales.
Calvin said it's not surprising Yellow Goose would turn to such an unusual means to sell cigarettes, which can account for one-third of convenience store sales in a year. He said most smokers aren't quitting as the state raises its taxes. They are merely finding ways to avoid the tax.
Anti-smoking groups called the move a scheme that keeps those smokers who may have been convinced to quit with the new higher taxes to remain as tobacco users.
"We're concerned about anything that encourages tax avoidance," said Russell Sciandra, director of the Center for a Tobacco Free New York. "We support the tax increase because of the public health impact it will have in reducing tobacco use."
Sciandra said he is also concerned that the new kiosk system will make it easier for teenagers to buy cigarettes.
Reed, the Oneida spokesman, said the six-carton minimum order and the required use of a credit card "will discourage teenagers from using the kiosks."
Larry Ballagh, who has a booming Internet business along with a small cigarette manufacturing operation on the Seneca Indian Cattaraugus Reservation, said he preferred to hold his comments until "I can take a look at what the Oneidas are doing."
"Of course," Ballagh added, "that doesn't mean that six months from now I may not be knee-deep in this kind of operation."
Defund the Stalinists!
You gotta admire their strategy for reconquering their once homeland. Casinos, cigs and booze. Pander to the sins of the conquerors. :) I love it!
I wonder if these are cigarettes made up of the leftovers and floor sweepings from the other brands. LOL! Oh well, smoke 'em if you got 'em.
Whats the quote... "to late to change things at with ballot box, to early to shoot the bastards"?
NYS Not Compelled To Collect Tax on Indian Land
Scroo the taxman.
I wonder if Va's Indian Tribes could get the price down to $15.00 a carton.
Reason #3,456 why NYS sucks. They have written the laws to obfuscate the meaning so much that even the d**k heads in government cannot figure out what they mean. The typical NYS government response:"We are not sure, so you better not do it just in case we figure it out"
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