Oklahoma Seeks to Raise Taxes on Tribal Tobacco Sales

The state is looking to fix all tribal cigarette tax rates at $1.03 per pack, making them even with the tax that nontribal retailers pay.

July 09, 2013

OKLAHOMA CITY – Oklahoma officials are considering raising taxes on tribal tobacco sales to a level that could eliminate their competitive advantage over nontribal tobacco retailers, NewsOK.com reports. 

Governor Mary Fallin said the push is to make tobacco taxes more consistent in the state. Over the past few month’s, her staff has been negotiating the compacts with many of the state’s American Indian tribes. Currently, five tribes have agreed to new deals: the Kaw, Cheyenne and Arapaho, Otoe Missouria, Apache and Fort Sill Apache tribes.  

While tribes are sovereign entities and are not subject to state taxes, they remit a payment in lieu of taxes to the state via wholesalers.

Oklahoma’s tribal retailers operate with five different tax rates. Smoke shops within 20 miles of the border with Kansas or Missouri charge either 6 or 26 cents per pack; those outside the 20 miles charge 43 cents, 51.5 cents or $1.03 per pack; and nontribal retailers charge $1.03 per pack.

Oklahoma is looking to fix all tribal taxes at $1.03, making them even with those that nontribal retailers pay. In return, the state would rebate to the tribes half of the taxes charged at retail outlets on their lands. 

“Basically, at the end of five years, in Oklahoma almost every tribe will be at that rate,” said the state’s General Counsel Steve Mullins. “They will buy a (tobacco) stamp for $1.03, but we will refund one half that amount of money. All cigarettes sold in Oklahoma will be sold at $1.03.”

“What the governor said was we’re not going to just rubber-stamp and renew the tobacco compacts up for expiration,” said Alex Weintz, Fallin’s spokesman. “But absolutely we want to sit down with every tribe interested in doing so to negotiate new compacts.”

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