Hi Ho Bloomberg, Away

In a welcome move the city of New York has joined with Gristedes in a legal action against Indian retailers that sell cigarettes without tax to non-Indians. As the NY Post reports this morning the suit targets tobacco wholesalers for selling to reservation retailers without the $1.50 a pack tax.

Refreshingly, the Post quotes city corporation counsel Michael Cardoza who told the paper, "These wholesalers' practices hurt all New Yorkers by shortchanging both the city and the state of tax dollars." Indeed they do but it would have been both appropriate and nice for Cardoza to at least mention that these practices have also devastated existing city businesses that have been put at a competitive disadvantage by the lucrative black market that resulted from the city's 2002 and the refusal of the city and state government to take action.

The Post errs, however, when it states that, "While reservation shops do not have to charge tax to their retail customers, they are supposed to pay it to wholesalers." Not so. As we have commented before, Indian retailers are legally obligated to charge the tax to their non-Indian customers but it is only the inaction of the governor that has prevented the proper enforcement of this issue.

Now we only need for the city to recognize that the proliferation of street peddlers has exactly the same impact as the sale of non-taxed cigarettes does. Legitimate tax paying store owners are victimized in both cases as is the city that loses the revenue.