CHARLESTOWN -- Upset about a proposed tariff on tribal sales, Narragansett Chief Sachem Matthew Thomas said yesterday he would not "delay forever" the opening of a tax-free cigarette shop on Route 2.
On Tuesday, the tribal council agreed to delay the opening of the roadside store following a meeting between Thomas and Governor Carcieri.
Both men are expected to talk again Tuesday at the tribe's headquarters in Charlestown. "We want to meet with the governor and see what he says," Thomas said.
But Thomas said he is concerned that a bill introduced Wednesday by Rep. Charlene Lima, D-Cranston, could derail the tribe's plans.
The Narragansett Smoke Shop is stocked with name-brand cigarettes that would be sold at below-market prices. The tribe might also sell cigarettes carrying the Narragansett name.
Lima's bill calls for "checkpoints" just outside the tribe's 1,800-acre settlement lands. Customers who buy tax-free cigarettes would have to pay a tariff after they leave the store.
Lima said she is worried the state will lose millions of dollars in taxes if smokers flock to Charlestown in search of cheaper cigarettes. She's also concerned the tribe will sell other tax-free products.
"I have the utmost respect for the chief and what the Indians have gone through" in their bid to open a casino, Lima said. "He has to fight for his people. But my responsibility is to the taxpayers. And this could have a devastating effect on the budget."
But Thomas said Lima's bill undermines the tribe's work with Carcieri.
"We came out of a good meeting with the governor, the first good meeting with a governor in a long time," said Thomas. And then came Lima's bill. "It's like walking through the front door and having someone greet you and shake your hand, and then having someone whack you in the head with a piece of lumber on the way out.
"Our members are asking, 'Is this all a smoke show by the General Assembly to burn us?' It was disheartening."
The smoke shop's opening is anything but certain.
Carcieri has vowed to fight the tribe's plan to jettison a $1.32 state excise tax on a pack of cigarettes.
If 10 percent of Rhode Island's smokers shop at the Narragansett store, the state could lose more than $10 million of the $104.8 million it expects to collect in excise taxes next year, said Tax Administrator R. Gary Clark.
The tribe could also drop a 7 percent sales tax, although that hasn't been decided, Thomas said.
If the tribe doesn't collect the sales tax, the state could lose another $2.2 million, Clark said. "On top of that, other retailers will be severely undersold, which will hurt businesses and the economy," he said.
Lawyers from both sides will exchange letters outlining their views.
"We've agreed to discuss the issues rather than litigate them," said John F. Killoy Jr., a lawyer for the tribe. "The areas of Indian law are very complex." But the tribe is a federally recognized sovereign nation and state laws or acts "don't preclude economic activity on tribal lands," he said.
The state disagrees.
"We feel very strongly that activities on settlement lands are subject to the laws of the state of Rhode Island," said Andrew Hodgkin, the governor's legal counsel.
Meanwhile, the tribe needs to make money, Thomas said.
"I'm going to reach out to the governor. But I am concerned about this bill taking on a life of its own in the General Assembly. If it does, then all bets are off."
