NEW YORK – The Cherokee Nation Council passed legislation earlier this month that will establish a new tobacco compact with the state of Oklahoma, Indian Country Today Media Network reports.
The Cherokee Nation-State of Oklahoma Tobacco Tax Compact Act of 2013 is designed to provide greater benefits to smoke shop owners with Cherokee tribal jurisdictions in northeast Oklahoma while allowing Oklahoma to collect 100% of its tax revenue share upfront.
“It is going to be a win-win-win for all parties involved,” said Cherokee Nation Principal Chief Bill John Baker. “The state will get its share, local smoke shop owners will do better than they ever did under the previous compact, and the Cherokee Nation will recapture some of the lost market share within our jurisdiction.”
Under the Cherokee Nation’s previous compact, the Nation collected a $1.50 tribal tax and the State collected 50% of all applicable state cigarette taxes for sales to tribal retailers. The tribe was not allowed to rebate any part of the tribal tax to tobacco retailers.
The new compact gradually decreases tribal tax rates on cigarette cartons by retailers. Through the end of the year, the tax rate will be $3.65 per carton, with an eventual tax rate of $.80 per carton by October 1, 2014.
By May 1, 2018, tax revenues will be split 50/50 between the Cherokee Nation and Oklahoma. That split will continue through the end of the compact on December 31, 2024.
Tax revenue splits for all other tobacco products will be 65/35 between the Cherokee Nation and Oklahoma through December 31 2017, and a 50/50 revenue distribution beginning January 1, 2018 through the end of the compact.
Since 1991, Oklahoma was authorized to collect state taxes on tobacco products sold by tribal businesses to non-tribal members.
“The new tobacco compact shows our support as a government for these smoke shop owners and all the people they employ,” said Cherokee Nation Deputy Speaker Janelle Fullbright. “Our hope is that the agreement will boost sales revenue to benefit tribal retailers and retain hundreds of jobs within the tribal jurisdiction.”