News Releases
Office of Governor Gary Locke
FOR IMMEDIATE RELEASE - January 5, 2005
Contact:  Governor's Communications Office, 360-902-4136
Alt Contact:  Department of Revenue, 360-705-6603; Puyallup Tribe, 253-405-4893

Gov. Gary Locke, Puyallup Tribe Reach Cigarette Taxation Agreement; Governor Declares ‘Cigarette Wars’ between Tribes and State Over

OLYMPIA – Jan. 5, 2005 – Gov. Gary Locke today announced that decades of conflict between the state and tribes over cigarette sales to non-Indians have virtually ended with the announcement of a cigarette tax agreement with the Puyallup Indian Tribe. Locke and Puyallup Tribal Chair Herman Dillon, Sr. announced the agreement today in Olympia.

“This issue has divided the state and the tribes for decades,” Locke said. “I am pleased to announce that the cigarette wars are now over.”

The agreement with the Puyallup Tribe is the 18th agreement the state has reached with tribes since talks began in 2001. If the agreement is approved by the Legislature and ratified by the incoming governor, the state Department of Revenue estimates that 90 percent of cigarettes sold on tribal land would be covered by agreements with the state.

The agreements with the tribes are intended to remedy a situation where the state lost tax revenues when non-Indians purchased cigarettes from smokeshops located on Indian reservations without paying the state tax. The advantage of these agreements to tribal retailers is they will no longer risk losing expensive shipments of cigarettes enroute to the reservations that are considered contraband by the state.

The Puyallup cigarette tax agreement differs from the legislatively approved model that the state has relied on in reaching agreements with 17 other tribes. Those agreements required the tribes to impose a tribal tax that began at 80 percent of the combined state cigarette and sales tax rate and ramped up to 100 percent within three years. All of the proceeds went to the tribes.

Locke said the agreement with the Puyallup Tribe recognizes the very different nature of the cigarette trade on the Puyallup Indian Reservation. Sales there are made through 23 independent retailers, who have significant investments in businesses that will be affected by the imposition of taxes.

The governor said the sheer scale of businesses done by smokeshops on the Puyallup reservation dictated a unique approach that would reduce much of the competitive advantage from the sale of tax-free cigarettes to non-Indians while allowing tribal retailers to remain in business.

The agreement with the Puyallup Tribe calls for a tribal tax of $11.75 per carton sold, with 30 percent of the tax revenue to be shared with the state. The Puyallup agreement also requires that retailers purchase their cigarettes through state-licensed wholesalers, sell the cigarettes at not less than the wholesale price, and add the tax to the retail selling price.

“This is a win-win for both the state and the Puyallup tribe,” Locke said. “We’ve addressed this issue through pricing and compliance strategies rather than the imposition of exactly equivalent taxes,” Locke said. “It’s a solution that will work for both sides.”

“I urge the Legislature to pass legislation that will approve this agreement,” Locke added. “It’s a great example of what we can achieve through government-to-government negotiations in the spirit of the Centennial Accord.”

John Weymer with the Puyallup Tribe said, “This issue has long divided the Puyallup Tribe and the state. Under this mutual agreement both the state and the tribe will benefit. The state will have a new revenue source to help with the large budget deficit and the tribe will be able to conduct business that is competitive in the marketplace.”

The 17 other tribes that have signed cigarette tax agreements with the state are: the Chehalis Tribe, Jamestown S’Klallam Tribe, Muckleshoot Tribe, Nisqually Tribe, Nooksack Tribe, Port Gamble S'Klallam Tribe, Quinault Nation, Samish Nation, Swinomish Tribe, Squaxin Island Tribe, Tulalip Tribes, Upper Skagit Tribe, Yakama Nation, Lummi Tribe, Kalispel Tribe, the Sauk Suiattle Tribe and the Skokomish Tribe.

In addition, four other tribes are eligible to negotiate compacts under the existing law (Suquamish, Snoqualmie, Quileute and Stillaguamish) and four more (Colville, Cowlitz, Lower Elwha Klallam and Makah) have asked to be added to the list of eligible tribes in the 2005 Legislature.


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