January 16, 2004

BUFFALO, N.Y. (AP) The Seneca Indian Nation is suing New York over the state's ban on Internet tobacco sales, claiming the law is unconstitutional and interferes with the nation's sovereignty.
The suit, filed in U.S. District Court, is the third legal challenge to the 2000 law enacted in June. The other lawsuits are pending.
``If enforced, the (law) would severely restrict the manner in which Native American retailers in New York have been able to transact business for years, and would represent unlawful interference with the sovereignty of the Nation,'' the Senecas' attorneys said in court papers reviewed by The Buffalo News.
Attorney Paul Cambria said tobacco sellers are licensed by the nation, and the money paid for those licenses fund services for Senecas, a tribe of roughly 7,000 with two western New York reservations.
Reservation businesses sell large quantities of reduced-priced cigarettes because, unlike off-reservation stores, they do not charge state sales tax. The state has plans, however, to begin taxing gasoline and cigarette sales to non-Indian customers on March 1.
The ban on Internet and mail-order sales of cigarettes was passed as public health law, with lawyers saying the goal was to limit children's access to cigarettes.
Critics contend the true purpose is to increase the state's tax revenues by forcing people to buy cigarettes at brick-and-mortar stores within New York state.
Others challenging the ban include the Online Tobacco Retailers Association, or OLTRA, which filed suit along with a Seneca Indian retailer, two out-of-state online sellers and two disabled consumers last year.
A second suit, by two Seneca Indian business people, also is pending.

Cigarette sales here plummeted by half after the city hiked its tax by $1.42 a pack - but despite the decline in sales, tax revenues skyrocketed beyond projections, according to figures released yesterday.
Sam Miller, a spokesman for the Finance Department, said the city hauled in $23 million last month from smokers, compared to $2.3 million in July 2001.
On July 1, the city's tax soared from 8 cents to $1.50 a pack, driving up the price to $7 or more at many outlets.
The results were predictable.
Sales dived from 29.2 million to 15.6 million packs, based on calculations made from the sale of tax-stamp rolls.
Each roll contains 30,000 stamps. Last month, 521 tax rolls were sold. A year ago, the number was 974.
"People are buying half as many cigarettes, but we're making five times as much money," boasted Jordan Barowitz, a spokesman for Mayor Bloomberg.
When he first proposed the tax, Bloomberg said he was trying to save lives as well as raise revenue.
Under terms of a deal with the state, the city keeps 53.5 percent of what it collects, or $12.3 million. The rest goes to Albany.
The city had expected to take in just $11 million last month.
Officials concede that smokers can easily evade the tax by shopping outside the five boroughs, especially at tax-free Indian reservations, and on the Internet.
Raj Patel, who has operated a newsstand on Park Row across from City Hall since 1989, said his customers are deserting him in droves.
"People buy from the Internet - $35 a carton. People buy from New Jersey, Long Island," he said.
He said cigarette sales in his store have fallen from 35 to 40 cartons a week to 15 to 20.
Patel said it costs him $64 for a carton of 10 packs, which he sells at $7 to $7.50 a pack.
"People throw the carton. They say, .What is this?' How can we explain?" he asked.
"It's very hard to survive. We lose the business also because other things are not selling, like soda, magazines, candy."
Patel pointed to his empty shop, which he said once sold more magazines than any downtown retailers besides those in the World Trade Center.
"Look," he said. "No one."
Richard Lipsky, who represents thousands of small stores in the Neighborhood Retail Alliance, warned that the city was threatening the survival of many mom-and-pop businesses.
He also predicted a wave of smuggling.
"When they did a similar gigantic tax in Canada in 1992-93, they created a $1 billion smuggling industry," Lipsky pointed out the day before the tax took effect.
"Two years later, they repealed the tax."