PACT Act may cancel out Senecas' smokes

BUFFALO, N.Y. (WIVB) - If you're a smoker, you know you already pay a lot in taxes on each pack or carton of cigarettes. And now, Governor Paterson is floating the idea of raising the cigarette tax again.

That action could widen the gap even further between the cigarettes sold on Indian reservations, where they don't even collect state taxes, and off-reservation sales. But Congress is now stepping in with a measure that convenience stores say could be a game changer.

As much as 70 percent of the cigarettes manufactured by the Seneca Nation of Indians are sent to customers by mail order, but that business could get snuffed out by the U.S. Congress.

The PACT Act, designed to crack down on illegal cigarette trafficking, would ban all cigarette deliveries by the U.S. Postal Service.

"We're not smugglers. We don't deal in contraband. We do legitimate business. We create jobs. We create opportunity. We're part of this region's economy," said J.C. Seneca of the Seneca Nation of Indians.

Seneca, who overseas cigarette-making for the Seneca Nation, told News 4 taking deliveries out of the equation could cost hundreds of jobs for Senecas, and non-Senecas, who make and sell the product.

But non-Indian merchants have been doing a slow burn for years over cigarette and gasoline because the Senecas refuse to collect state taxes, giving them a big advantage in the marketplace. Spokesman James Calvin says the PACT Act would level the playing field.

"Anyone selling cigarettes, in store or by mail order or over the Internet, would have to collect the state tax," said James Calvin, President of the NY Association of Convenience Stores.

But J.C. Seneca points out cigarettes the Senecas sell do bring money into the State Treasury - about $6 a carton through the Master Settlement Agreement, which was reached in Federal Court years ago.

Seneca said, "If it does go through, those dollars are gone. Jobs are gone, opportunity. It all effects western New York."

There are reports that the PACT Tax is well on its way to passage. One version has already passed the House of Representatives, and both of New York's U.S. senators are co-sponsoring the Senate version.