BUFFALO — A federal judge has sided with New York in the latest ruling in a dispute over the state’s plans to tax most Indian reservation smoke-shop sales — but collection of the tax is on hold for now.
US District Judge Richard Arcara in Buffalo denied a request to block the state from collecting a sales tax on cigarettes sold to non-Indians.
But he froze his decision so that the two tribes who sought the order can appeal.
Arcara’s ruling Tuesday, in a case brought by the Unkechaug and St. Regis Mohawk tribes, mirrors an earlier decision in a challenge by the Seneca and Cayuga nations.
The decisions mean New York still can’t start collecting the $4.35-per-pack sales tax until a higher court, the Second Circuit Court of Appeals, hears the issue.
It’s unknown how long the appeals process will take.
The cash-starved state anticipates $200 million a year in revenue from the tribal cigarette tax.
The tribes argue the regulations would interfere with their rights of tribal sovereignty, make it difficult for members to buy tax-free cigarettes, and devastate tribal economies that depend on the sale of lower-priced cigarettes to fund programs and services.