CITY lawyers have come up with a novel way around Al bany’s refusal to enforce state cigarette-tax law on New York’s Indian reservations: Ask a federal judge to do the job.
It might even work — to an extent.
Governors from Mario Cuomo to David Paterson have quaked at the idea of cracking down on the tribes’ illicit tobacco trade. Last year, according to state Tax Department figures, that trade moved at least 270 million packs of cigarettes off state reservations — costing state and local governments an estimated billion dollars in lost taxes.
That’s left fed-up localities heading to various state and federal courts to try to collect. Last week, New York City achieved the first significant success, when federal judge Carol Bagley Amon issued an injunction barring most major retailers at the Poospatuck reservation on Long Island from selling cigarettes to non-Indians.
Treaties grant Indians the right to tax-free cigarettes smokes for their own use. But Poospatuck retailers bought a whopping 85 million packs of tax-free cigarettes last year — and fewer than 300 Indians live on the reservation.
You do the math.
City lawyers demonstrated that many, if not most, of those smokes came straight into Gotham via smugglers, who can reap a huge profit by taking advantage of the combined $4.25-a-pack in state and city taxes.
Nor are the reservation venders just passive partners. One smuggler testified that tribal retailers even hired “riders” — bikers scouting out her route — to help her avoid cops while carrying the goods.
Cracking down should be fairly straightforward. All New York cigarette taxes are paid up-front by a limited number of wholesalers — except on packs bound for reservations.
And state tax officials know precisely how many tribal retailers buy, because wholesalers have to account for every pack they get from manufacturers.
A 2006 law was supposed to cripple the trade by taxing wholesalers on all cigarettes they sell — while issuing vouchers to the tribes for the few packs sold to Indians.
But then-Gov. George Pataki backed down (presumably for fear of Indian demonstrations like the one that shut down the Thruway in 1997), telling the Tax Department not to issue the vouchers — which let the tribes go to court and stop the enforcement. And Govs. Spitzer and Paterson have maintained Pataki’s policy.
So Mayor Bloomberg called in the feds.
The city is seeking civil relief under the federal Contraband Cigarette Trafficking Act, which makes it a federal crime to possess, sell or transport large quantities of untaxed cigarettes in states that tax them.
Victory would make Amon’s injunction permanent (it’s now stayed for 30 days so the tribe can appeal) and open the door for court-imposed sanctions against retailers who keep selling to non-Indians. Other local governments could then sue and shut down other tribal sellers.
But other courts may not cooperate.
Statewide, more than half a dozen major Indian-cigarette-related cases are under way. For example, Amon explicitly disregarded an ill-reasoned recent ruling by a Rochester-based state appeals court, which struck down efforts by Cayuga and Oneida Counties to prosecute Cayuga Indian retailers.
Among other head-scratchers, that court found that Gov. Paterson’s unwillingness to collect taxes on reservations means that no such taxes even exist.
Judge Amon said that she expects the state’s highest court to overturn that ruling. But if it doesn’t, the city’s back to square one.
Of course, ultimately, no judicial remedy can take the place of firm executive action.
The Poospatuck injunction, for one, only covers several of the largest retailers on the reservation. Smaller stores, or new ones, can pick up the slack.
City lawyers say Amon’s ruling would make it easy to move against new venders — and wholesalers’ records would show whom to target. But some Poospatuck retailers already get cigarettes from Seneca stores upstate — who don’t have to tell the state whom they’re selling to.
So, while Amon’s injunction could cut into Poospatuck business, keeping up the pressure would require a statewide game of Whack-a-Mole. And the city and state’s hefty cigarette taxes will always provide a huge profit motive for smugglers.
Bottom line: This job can’t get done without the state making sincere efforts to enforce the law. The courts can’t do it alone.
jwilson@nypost.com