Judge blocks NY tax on Indian cigarettes

A federal judge has temporarily blocked New York state’s plans to tax the Seneca and Cayuga nations’ sales of cigarettes to non-Indian customers.

Judge Richard Arcara granted a request by the tribes for a court order that stops the state from imposing a $4.35 per pack sales tax on cigarettes sold by reservation retailers starting on Wednesday.

It wasn’t immediately clear if the state will go ahead with taxes on other tribes. Attempts to collect the tax in the 1990s resulted in sometimes violent protests on Seneca lands.

The Senecas — the biggest player in the business — and Cayugas argued the policy change violates sovereign rights and will damage their economies.

The cash-strapped state sees the tax as a potential $200 million source of annual revenue.