WA Gas Stations Sue Over Indian Tax Breaks

Gas station owners claim Indian tribes received fuel tax refunds that were unlawfully paid.

February 10, 2011

OLYMPIA, WA - Washington state gas station owners have sued the state for $90 million in fuel tax refunds that they claim were unlawfully paid to Indian tribes, UPI.com reports.

Brought by The Automotive United Trades Organization's (AUTO), the suit aims to stop the state from paying gas tax refunds to the tribes. Under Washington state law, tribal members are exempt from paying tax at reservation stations, but AUTO maintains the state issued refunds for taxes that the tribes never paid in the first place.

As a result of the payments, the lawsuit claims the tribal gas stations were able to sell fuel at a lower cost than non-tribal stations "in the range of 5 cents or more per gallon," which it characterized as placing a competitive disadvantage on non-reservation station owners. It also said the payments violated the Washington Constitution, which reserves the fuel tax "exclusively for highway purposes."

A county judged dismissed the case last week, declaring tribes cannot be sued in state or federal court. AUTO's lawyers are planning to appeal to the state Supreme Court.

"From a legal standpoint, it still boggles my mind," said Phil Talmadge, one of AUTO's attorneys and a former state Supreme Court justice.

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