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Bills Would Tighten Requirements on Smoke Shops in Oklahoma

Posted on: Tuesday, 7 March 2006, 21:01 CST

By Marie Price

A bill aimed at reducing the number of cigarette and other tobacco products sold by tribal smoke shops with the wrong tax stamp passed the Senate on Monday by 38-7.

State Sen. Cal Hobson, D-Lexington, said his Senate Bill 1950 is intended to improve enforcement of tobacco regulations and improve collections, chiefly by moving the tax back up the line to the wholesale level.

This bill is what we can do in the state of Oklahoma on the enforcement side, Hobson said.

The senator said he hopes the bill encourages more discussion between the governor's office and the tribes.

Some tribes are litigating their compacting disputes with the state. A Tulsa federal judge recently ordered the state to engage in arbitration with the Osage Nation. The Cherokee Nation has selected a former federal judge to arbitrate its tobacco tax compact case.

Hobson said SB 1950 would also increase fines and require more information to be forwarded to the Oklahoma Tax Commission, where tax-related data would be open to the public and press.

The fine for misdemeanor infractions by wholesalers and others involved in tribal tobacco sales, other than consumers, would rise from $200 to $10,000 for a first offense, $25,000 for second offenses. Consumers would be subject to a $200 fine.

Hobson acknowledged that the wholesaler fine increase is substantial.

But the state is losing $4 million a month, he said. Currently, it's more profitable to ignore the law than to comply with it.

Smoke shops would be required to remit 100 percent of the state tobacco tax, but tribes would receive rebates that vary according to the terms of their compacts.

Some senators questioned the wisdom of opening up tobacco tax records to the public, but Hobson disagreed.

Sunshine is our friend in this environment, he said.

State Sen. Frank Shurden, D-Henryetta, objected to the bill, saying he would not vote for anything that effectively change the terms of negotiated compacts.

The Indians outsmarted the white man, and they're making a lot of money off of it, he said.

State Sen. Tom Adelson, D-Tulsa, said the state has an enforcement problem.

He said that in recent years smoke shops' market share of cigarette sales has risen from about 9 percent to 40 percent.

Hobson said the bill will enhance enforcement and add to the $90 million the state has taken in from increased tobacco taxes for health-related programs.

Senators also passed Adelson's SB 1096, which establishes tighter tax requirements on sales to tribes without tobacco compacts with the state.

The bill would require that tobacco products sold by wholesalers to non-compacting tribes bear tax stamps showing that all taxes have been paid, except that a percentage of each sale equal to the percent of Oklahoma's population that is Native American would have to bear restricted stamps showing that sales could be made only to enrolled tribal members.

The Adelson bill also would require non-compacting tribes to make available for state inspection records of all nontaxable sales. Sales for which information is missing would be deemed taxable.

Shurden held this bill on reconsideration.

Marie Price is a special projects/enterprise reporter for The Journal Record.

Source: Journal Record - Oklahoma City

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