PROVIDENCE -- Governor Carcieri yesterday promised to help the
Narragansett Indian tribe find a way to support its 2,600 members,
possibly through tribal-owned businesses, grants or other means.
"I'm open to things that could be done from a business standpoint," said
Carcieri, who vowed to visit the tribe's Charlestown headquarters this
week or next.
But he also said he would fight the tribe's plans to open a roadside
tobacco shop on Route 2 in Charlestown.
In response, Narragansett Chief Sachem Matthew Thomas said he would ask
the tribal government to postpone the opening of the smoke shop until
the two leaders meet again.
The tribe wants to sell tax-free cigarettes at the store, a business
venture launched by Indian tribes in states from New York to Arizona.
Smokers -- who pay more than $4.25 for a pack of cigarettes -- could
trim that price by ignoring a $1.32 state excise tax and a 7-percent
sales tax.
"They do not have the legal right to do this," said Carcieri. "The law
is very clear."
At stake is more than $100 million in cigarette taxes the state could
collect next year.
According to Tax Administrator R. Gary Clark, the state will get $96.5
million in cigarette taxes this year. Governor Carcieri's 2004 budget
proposes to increase the state tax on cigarettes to $1.61 per pack in
July, which would net the state $104.8 million next year.
Even if just 10 percent of the state's smokers bought tax-free
cigarettes from the tribe, the state would lose $10 million, Clark said.
That loss doesn't include another $27 million or more in lost sales
taxes. "That money has to be raised from somewhere," Clark said.
Also at issue is whether the state can regulate business on the tribe's
1,800 acres.
Thomas, who met with Carcieri at the State House yesterday, disagreed
with the governor's interpretation of the state's laws.
He said the tribe, recognized by the federal government, has a right to
sell tax-free cigarettes on its settlement lands. "We feel we have a
right and they feel we don't," said Thomas, who said he expects the
state to seek a court order to block the opening of the smoke shop.
He added that the governor "was very open-minded" about the tribe's
other needs and plans, including other businesses.
Before planning their smoke shop, tribal members visited similar stores
owned by the Oneida, Seminole and St. Regis Mohawk Indian Tribes, Thomas
said. "Outside of casino gambling, tobacco is the most profitable
business" a tribe can own, he said.
"It's a big issue in Indian country," said Andrew J. Lee, executive
director of the Harvard Project on American Indian Economic Development.
Tax-free smoke shops are part of a growing trend among tribes to start
businesses to support their members, he said. Other ventures include
construction companies, high-tech businesses, manufacturing, small
businesses and casinos. "The results have been mixed. But the general
trend has been encouraging," Lee said.
"Smoke shops are pretty much a standard business in most Indian states,"
especially Western ones, added Pete Homer, president of the National
Indian Business Association, a Washington, D.C., group that represents
24,000 Native American businesses. "Almost every tribe and even
individuals own smoke shops," he said.
In some states, cigarettes sold to Indians on reservations aren't taxed
-- but those sold to non-Indians are, Homer said.
In Rhode Island, retailers who sell cigarettes must have a cigarette tax
license and a retail sales permit. They must also buy their cigarettes
from a licensed Rhode Island distributor, who marks each pack with a
stamp from the state. "The Narragansetts are supposed to follow state
and federal laws," Clark said. "The laws are made for everyone."
Thomas yesterday would not say where the tribe will buy its cigarettes.
But in a bid to ensure that the state doesn't lose its tax money, Rep.
Charlene Lima, D-Cranston is expected to introduce a bill today that
would require smokers to "declare" their tax-free tribal purchases.
Under the law, buyers would have to declare their tobacco goods at
"checkpoints" just outside the tribe's land and pay a tariff equal to
the lost sales-tax revenue.
"While the tribe 'might' have a right to sell tax-free products on their
sovereign land," Lima said, "Rhode Island has a right to recoup any lost
tax revenues by any legal means available." She charged the tribe with
using the smoke shop "as leverage for a lucrative casino contract."
A tax-free shop, she said, "would cost the state millions and millions
of dollars. This is money used to fund social programs, including those
for the elderly and for children."
Thomas said he had not seen Lima's bill and declined to comment.
But he did say the tribe needs a strong business such as a casino or a
smoke shop to support its members. The tribe, he said, cannot survive
selling baskets or pottery from a roadside stand.
