The tobacco tax increase which Oklahoma voters approved overwhelmingly last year has run into a buzzsaw of controversy of late. The only thing really clear is that the issue is likely headed to the courts or to the Legislature.

At hearings this week, Cherokee Nation officials admitted their stores are selling cigarettes to each other, cutting the state out of nearly $1 a pack for cigarettes. Stores are buying cigarettes with a border stamp, a lower tax rate, and reselling them in non-border stores where a higher tax rate is required.

Diane Hammons, director of the Cherokee Nation's Justice Department, said the tribe does not believe the retail-to-retail sales are wrong, according to a story in The Tulsa World.

The state negotiated compacts with tribes which allow them to charge a lower rate in border areas so they can compete with smokeshops in neighboring states.

Some state officials believe the state is losing millions every month because of the compacts. However, officials say even though the revenue is $4 million a month below projections, the tax has brought in an additional $152 million.

One suggestion, made earlier this month by State Sen. Jim Wilson, seems to make some sense out of all of this. He has filed legislation to allow Gov. Brad Henry to buy out the compacts that give some smokeshops an unfair advantage.

Under SB 1027, according to Sen. Wilson, the governor would be authorized to enter into financial agreements with the tribes which have entered into tobacco tax compacts with the state to provide for termination of such compacts. The bill would allow the governor to determine the amount of the buy-out based on the amount of the benefit the governor determines will accrue to the state by virtue of the termination of the compact.

The legislation, if approved next session, gives the state and the tobacco companies the opportunity to make the agreement workable and gives Oklahoma voters the health care benefits promised when they voted the tax in.

While they're at it, the Legislature could figure out a way to better warn Internet cigarette buyers about the taxes they incur. The state is now in the business of trying to collect unpaid taxes from hundreds of cigarette buyers who turned to the Internet after the taxes increased here.

Trending Video

This Week's Circulars

Recommended for you