Saturday, August 22, 2009

Northwest Indians want no taxation in their sovereign nations

Alison Gottfriedson was no stranger to breaking state and federal laws. She was arrested repeatedly as a teenager in the 1960s and'70s for fishing in areas that were off-limits to Indians. She and her family ultimately won a victory for Indians throughout the Northwest - the right to half of the fish harvest in their traditional fishing areas.

When Gottfriedson died last month at age 57, she was embroiled in yet another battle for Native sovereignty: the right to sell tax-free cigarettes in her smoke shop at Franks Landing, south of Seattle.

In its heyday, cars looped around the garish smoke shop awaiting their turn at the drive-through window, while lines of smokers stretched through the front door, emerging with stacks of cartons of Marlboros, Newports and Camels. Signs boasting rock-bottom prices were posted near tribal paraphernalia, making the message clear: These deals are possible only on Indian land. Federal law states that only Indians can buy tax-free cigarettes, and smoke-shop clerks are required to check IDs. But Gottfriedson - and countless other smoke-shop owners - sold tax-free tobacco to anyone.

It was a lucrative business. Gottfriedson and her husband, Hank, members of the Squaxin Island Tribe, made more than $ 20 million between 2001 and 2007, selling cigarettes to their customers for about half the price they would have cost anywhere else.

But in May 2007, Gottfriedson emerged from her home to find a row of guns pointed at her. A team of federal agents ransacked her smoke shop. Children at the nearby Wa He Lut School, which was largely funded by smoke-shop proceeds, watched the whole thing.

"I've always been controversial, ever since I was a girl," Gottfriedson said just weeks before her death.

Gottfriedson was one of dozens of Pacific Northwest Indians in recent years to face federal charges over the sale of untaxed cigarettes. She was ordered to repay $ 9.2 million in back taxes, but because she used the proceeds to benefit the tribe, the judge - impressed by the respect she enjoyed among Northwestern tribes - sentenced her to only five years' probation. State and federal officials say members of other tribes became cogs in the wheels of international cigarette smuggling operations and spent their profits on lavish homes and luxury cars, all in the name of tribal sovereignty.

According to 2003 estimates by Washington's Liquor Control Board, the state has lost up to $ 223 million each year from the sale of untaxed cigarettes, with 60 percent of that loss due to Indian-owned smoke shops. The battle has been simmering since at least 1980, when a federal court judge ruled that Washington has the right to tax tobacco sold to non-Indians and members of other tribes on the Colville Indian Reservation. Many tribes consider the decision a blow to sovereignty, says Melody McCoy of the Native American Rights Fund in Colorado.

"The court allowed the state taxing jurisdiction to leap over reservation boundaries," she says.

Washington state lawmakers decided in 2001 to negotiate compacts that require tribes to tax cigarettes sold to non-Indians but allow the tribes to keep the tax revenue. Lawmakers hoped the solution would appease the tribes without undercutting non-Indian sellers.

Since then, Washington has increased its tobacco tax to $ 2.025 per pack, the fifth-highest in the country. Even as many tribes sign compacts with the state, prosecutors are cracking down on Indians who sell untaxed smokes.

"If you have a retailer that's not collecting the tax and trumping their own economic interests over the community, I don't see that as sovereignty, I see that as greed," says Tate London, a Tlingit Indian and federal prosecutor.

Washington is a hotbed for counterfeit, smuggled and tax-free cigarettes because of its high tax, and because it shares a long border with Idaho, where sales laws are less stringent. That means smoke-shop owners in Washington can easily transport cheaper cigarettes from Idaho.

The state is also home to 29 federally recognized tribes who have a long history of fighting for rights originally guaranteed by treaties signed in the 1800s. Tribes here don't hold the same reverence for tobacco as do Indians in other regions, but they consider their rights sacred - especially the right to hunt, fish and conduct business in their own way.

There's no difference between the fight for fishing rights and the fight for the right to sell goods and services tax-free on Indian land, says Billy Frank, Gottfriedson's uncle and a respected Indian leader.

"They say Alison owed $ 9 million, but she didn't owe a dime," Frank says. "The federal government violated our sovereign rights."

Frank longs for the day when IndiaElison Gottfriedson was no stranger to breaking the state and federal laws. She was arrested several times as a teenager in the 1960's and 70's for fishing in areas that were outside of the Indians. She and her family eventually won a victory for Indians across the northwestern part - the right to half the harvest of fish in their traditional fishing areas.

When Gottfriedson died last month at the age of 57 years, it was covered by yet another battle for Native sovereignty: the right to sell tax-free cigarettes in his shop to smoke Franks landed south of Seattle.

In its heyday, cars looped around the blinding smoke shop, awaiting their turn at the drive-through window, while a line of smokers through the front door is stretched, resulting in stacks of packages Marlboros, Newports and Camels. Signs boast rock-bottom prices have been deployed near the tribe, making a clear message: These deals are only possible on the Indian lands. Federal law stipulates that only Indians can buy tax-free cigarettes, and smoke-shop employees are required to check identification cards. But Gottfriedson - and countless other smoke-shop owners - sold without a tax on tobacco products to persons.

It was a lucrative business. Gottfriedson and her husband, Hank, are members of the Squaxin Island tribe, made more than $ 20 million between 2001 and 2007, sales of cigarettes to its customers for about half the price they cost anywhere else.

But in May 2007, Gottfriedson emerged from his house to find a line of guns pointed at her. The group of federal agents ransacked her smoke shop. Children in nearby Wa He LUT school, which is largely funded by the smoke-shop revenues, looking at all this.

"I have always been controversial, ever since I was a little girl," Gottfriedson said, just weeks before her death.

Gottfriedson was one of dozens of Indian north-western Pacific Ocean in recent years to face federal charges for selling cigarettes tax-free. She was ordered to pay $ 9.2 million in the back taxes, but because it used the proceeds for the benefit of the tribe, the judge - impressed by the respect it enjoys among the tribes of North-West - sentenced her only five years probation. State and federal officials say members of other tribes became cogs in the wheels of international cigarette smuggling operation, and spent their earnings on lavish houses and luxury cars, all in the name of tribal sovereignty.

2003 is estimated Washington to control alcohol, the state has lost up to $ 223 million a year from the sale of taxable cigarettes, and 60 percent, losses in connection with Indian property smoke shops. The battle was Simmering at least since 1980, when a federal judge ruled that Washington has the right to tax tobacco sold to non-Indians and other tribes on the Colville Indian Reservation. Many tribes consider the decision to strike on the sovereignty, said Melody McCoy of the American Rights Fund in Colorado.

"The court allowed the state tax jurisdiction outside reservation boundaries jump," she said.

Washington state legislators decided in 2001 negotiations on treaties, which require tribal tax cigarettes sold to non-Indians, but also allows tribes to retain tax revenues. Legislators hope that a solution would be to appease the tribes, does not undermine the non-Indian retailers.

Since then, Washington has increased the tobacco tax to $ 2.025 per pack, the fifth largest in the country. Even now, when many tribes to sign treaties with the state, prosecutors are cracking down on the Indians, who sell tax-smokers.

"If you have any retail outlets that do not collect tax and surpass their own economic interests in society, I do not see that as sovereignty, I see as the greed, says Tate London, a Tlingit Indian and a federal prosecutor.

Washington is a hotbed for fraud, and tax-free import of cigarettes because of their high-tax, but also because it shares the border with Idaho, where the sale of the laws are less stringent. This means the smoke-shop owners in Washington is easy to transport cheaper cigarettes from Idaho.

The state also is home to 29 recognized federal tribes, who have a long history of fighting for the rights originally guaranteed by treaties signed in 1800. The tribes here did not hold the same reverence to tobacco as the Indians in other regions, but they consider their sacred rights - in particular the right to hunt, fish and conduct business in its own way.

There is no difference between the fight for the rights to fish, and the struggle for the right to sell goods and services without a tax on Indian land, said Billy Frank, Gottfriedson uncle and respected leader of the Indians.

"They say Alison debt of $ 9 million, but it is not obliged to a penny," said Frank. "The federal government has violated our sovereign rights."

Frank aspires to the day when Indians would be able to sell products on their own land, without regard to the external tax laws. This may seem impossible now, but Frank is widely regarded as the driving force of tribal fishing rights in the north-western Pacific Ocean. He saw the impossible happen before.

"The way things are now, then do not say that our children will not go to prison, as Alison did," he said. "There, fishing, and the taxation, but it's the same question."

Krista Kapralos is a journalist based in the north-western Pacific, where she writes about American Indian tribes and religii.ns will be able to sell products on their own land without regard to outside tax laws. That might seem impossible now, but Frank is widely regarded as the driving force behind tribal fishing rights in the Pacific Northwest. He's seen the impossible happen before.

"The way things are now, there's nothing to say that our kids won't go to jail, just like Alison did," he says. "There's fishing, and there's taxation, but it's the same issue."

Krista Kapralos is a journalist based in the Pacific Northwest, where she writes about American Indian tribes and religion.

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