Tribe-state tobacco compact at standstill
BY CLIFTON ADCOCK World Staff Writer
Monday, September 22, 2008
9/22/08 at 2:30 AM
Creek Nation leaders say the state has gone back on its word.
OKMULGEE — After what looked like a possible deal last week, negotiations between the state and the Muscogee (Creek) Nation for a tobacco compact have come to a standstill.
Tribal leaders say the state has gone back on its word more than once during negotiations, is not dealing fairly with the tribe and is attempting to infringe on the tribe's sovereignty.
After years of struggles and failed negotiations, talks were scuttled Friday, said Creek Nation Tax Commissioner Dana Johnson. The Creek Nation has rejected state-backed revisions to a compact proposed by the tribe.
During a four-year dispute, Creek Nation Chief A.D. Ellis has avoided extensive public comments on the tobacco dispute. He's now speaking out more aggressively.
"It's real important to us, and most important to the shops, because they want some stability here," Ellis said. "We haven't had that in three years. We've been working on it for three years and haven't come to an agreement on it. I have to see our nation is treated equal to the rest of them."
The state has lost millions of dollars in tax revenue because it does not have a tobacco compact with the Creek Nation, and many tribal retailers are ready for the compact fight to end. But the tribe will not accept a deal that gives other tribes a lower tax rate, Ellis said.
For years, after its compact with the state expired, the tribe has outmaneuvered the state by obtaining low-tax cigarettes reserved for other tribes' border-area stores and re-selling them in Tulsa.
And some tribal stores have introduced into the market off-brand cigarettes that State Treasurer Scott Meacham called "illegal" in a letter to the tribe.
The cigarettes in question are not on the state's Master Settlement Agreement list of approved cigarettes, so cannot legally be sold by retailers in the state and cannot be taxed by the state.
But, as sovereign entities, Indian tribes are outside of the state law forbidding the sale of the cigarettes. And since most of the non-MSA list cigarettes are manufactured and sold by other Indian tribes, the state cannot interfere with the sales, tribal officials say.
By almost all accounts, the tobacco compact issue has been a mess. Even a new compact signed with the Comanche Nation last month — which the state hoped would bring all tribes to a single tax — appears not to have helped.
During a Sept. 12 meeting with the Creek Nation's National Council, Ellis announced that the tribe had sent a draft compact that would set the tax rate on cigarettes sold at tribal stores at $5.15 per carton, plus a $1.55 tribal tax, or 67 cents per pack, similar to the Comanche compact.
The proposed tobacco compact would have eliminated low-tax cigarettes, which have a 6-cent tax stamp, that Creeks sell in the Tulsa area.
The next day, the state returned the compact because of language disputes.
The Creek nation wants to send disputes to federal court rather than an arbitration panel — a change the state previously said it was fine with, Ellis said in a telephone interview.
The state's proposed changes included a provision that would use state district court as a back-up if the federal courts refused to hear the dispute, Meacham said.
On Friday, the tribe said the changes were unacceptable, Johnson said.
"We're not going to accept the offer," Johnson said Friday. "At this time, negotiations are on hold."
Meacham said he was not aware of the rejection of the proposed changes Friday.
State negotiators also said there would be no more lower tax border rate areas, Johnson said, and that tribes with those compacts were doing away with the border rates.
However, a few days after that meeting, the state made an agreement with the Kaw Nation, which neighbors the Osage Nation, that allowed it to have a lower tax border rate, Johnson said.
"We were pushed right back to where we had always been," Johnson said. "And it all stems from the fact that he (Meacham) couldn't stick with what he said."
Because the state has existing border-rate compacts with many of the tribes, it has to work the rates out of the system, Meacham said.
"It can't be immediately changed," Meacham said. "You have to work around the tribes that still have a compact until they expire."
Another sticking point is the non-MSA cigarettes that have no state tax stamp, such as Seneca, King Mountain and Skydancer, Ellis said.
Many of the cigarettes are made by other Indian tribes, and, compact or not, the state cannot interfere with tribe-to-tribe commerce, Ellis said, although attorneys at the Sept. 12 meeting cautioned the tribe that if it signed on to the compact, it could end up in court over the issue.
"I think if they could, they would've already done it," Ellis said. "It's a very big sticking point. I think two sovereign nations working together in commerce is perfectly legal, that's my personal opinion."
Clifton Adcock 581-8462
clifton.adcock@tulsaworld.com
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Chief A. D. Ellis: He said the Creek Nation will not accept a deal that gives other tribes a lower tax rate.
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