OKLAHOMA CITY – Late last week, convenience store owners asked Oklahoma to change the way it collects tobacco taxes, the Journal Record reports.

“Eleven or 12 years ago, we faced the same problem with motor fuel taxes...We changed the point of collection of the tax to the wholesale level, and everybody paid the same tax. Then the state refunded money back to the tribes,” said Jim Griffith, CEO of OnCue Marketing and a past president of the Oklahoma Petroleum Marketers Association. Griffith appeared before the state House Appropriations Subcommittee on Revenue and Taxation to talk about this issue.

Griffith referenced the outcome of the 1995 court decision Oklahoma Tax Commission v. Chickasaw Nation, in which the U.S. Supreme Court decided that the state could not make tribal retailers collect state fuel taxes. As the result of that ruling, Oklahoma and other states changed their laws to make the distributor pay the taxes. In practice, that meant the fuel both tribal and non-tribal retailers received already had the tax paid on it.

Oklahoma’s cigarette tax currently stands at $1.03 per pack. The state negotiated tobacco compacts with Native American tribes, which involve a few different tax rates, from 86 cents per pack to 6 cents per pack. However, the 6-cent stamp, made for only a few tribal smoke shops, has appeared on cigarettes sold all over the state. The Oklahoma Tax Commission attempts to stop abuses of the system with two agency rules, but those rules currently are involved in a pending legal battle.

Don Williams, representing the Oklahoma Wholesale Marketers Association, told the committee that between March and August 2007, 21 percent of all cigarettes purchased in Oklahoma had the 6-cent stamp, despite the fact that only 39 tribal smoke shops are authorized to use the exception rate. During the same period, 35 percent of all cigarettes sold in Oklahoma were sold at a tax rate of 31 cents or less.

During the 2008 session, legislators will attempt once more to improve the enforcement of tobacco taxes. A bill supported by the petroleum marketers would give the Tax Commission permission to hand over relevant records to the attorney general’s office and law enforcement agencies. That same measure would explain the law’s definitions relating to untaxed or improperly taxed tobacco products, and also would apply reporting requirements for wholesalers.