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There’s no tax loophole on tribal lands
We would like to respond to the New Mexico Petroleum Marketers Association’s attack on tribal gas tax agreements. First, a little history about the gas tax. The current law, or the “1999 Compromise,” is the result of a five-year (1995-1999) negotiation between the New Mexico Legislature and the tribes. Both sides understood the terms and there is no “loophole” as misleadingly stated by Mr. Baca.
The compromise requires the tribes to impose a 17-cent tax on gasoline sold at retail on its reservation, and prohibits a second 17-cent tax by the state. The various tribes then use this tax revenue to serve the needs of their members.
This compromise does three things: It ensures that all gasoline sold within the state is taxed and that there are no untaxed gasoline sales; it levels the playing field between on-reservation and off-reservation sales since all sales are taxed at the current rate of 17 cents per gallon; and it ensures that taxes generated from sales on tribal land stays within the tribes.
The tribes are sovereign government entities, and as such, use tax revenues to provide much-needed services to their membership, just as the state and local governments do with their tax income. Some examples of projects that are dependent on such revenues include:
- Water and sewer systems
- Emergency and law enforcements vehicles
- Road construction and repair
- Wellness centers and a dialysis clinic
- Public safety and community buildings
In fact, some of these critical infrastructure projects are financed by bonds issued from the NMFA and secured by the tribal gasoline tax revenues. Taking away this revenue would result in defaults on state loans, causing more economic hardship for the state.
In addition to funding these projects, the sales of gas and other products have provided much-needed economic development for various tribes, especially for the eight pueblos that do not have gaming. Shifting the gas tax revenue from tribal governments to the state is like robbing Peter to pay Paul.
And we have to question Mr. Baca’s claim that $400 million in additional revenue would be generated because of sales on tribal land alone. If my basic math serves me, that means that at $0.17 per gallon, there would be almost 2.35 billion gallons of gasoline sold on tribal lands! That’s 2.35 billion – with a “B”!
That’s preposterous, since in 2009 there were only 1.34 billion total gallons of gasoline and ethanol combined in the state, and that figure includes the amount sold on tribal lands. Clearly Mr. Baca has been inhaling too much gasoline fumes.
Finally, let’s be honest about motivation. The New Mexico Petroleum Marketers Association is not altruistically looking for creative solutions for fixing the state’s budget. Their advice is self-serving and is just part of their years-long campaign to try to monopolize gas sales in New Mexico for private profit and undermine the tribes.
The current structure respects the ongoing government-to-government relationship between the state and tribes. It allows each entity to collect the revenue they earn and provide for their constituents.
Ortiz is chairman of the New Mexico Native American Petroleum Coalition, a former lieutenant governor for the Pueblo of Acoma and a former commissioner on the New Mexico State Transportation Commission.
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Actually, they are both right. The tribes are sovereign nations and can impose whatever taxes they want within their borders. They also have similar obligations to provide services to their members as local governments. However, they can cross-subsidize their businesses beyond the fig leaf of a similar tax (i.e. no income taxes, cheap leases or no cost of land for tribal retailers, etc.) that provide an economic advantage over nearby non-tribal retailers resulting in price advantages that off reservation retailers simply can’t compete with. That’s why people drive to tribes and pueblos to buy gas and cigarettes and to gamble. The law allows the tribes to do what they wish within their borders and to their members, but they are not necessarily entitled to use the tax advantage to attract non-tribal members at the state’s detriment. However, NM law and policy do allow for that, as do some other states. Good policy? I’m not a tribal member and I’m not a non-tribal business trying to make a living near a tribal border. What its not is transparent. I personally buy tribal gas rather than from Mr. Baca’s people because the state and tribes allow//provide the incentive for me to do so. It’s also a way to avoid paying state tax for the roads I drive on everyday (that’s what the gas tax is used for) so someone else can pay more. If the incentive changes, I may behave differently. In the meantime, it is what it is – and tthe roads need funding and so do the tribes.
Ortiz is correct … Baca is in error … but any idea how much ‘state’ capitol outlay goes to the tribes to build infrastructure, in addition to the gas tank (and, I assume, the cigarette taxes) they keep for those purposes? Of the amount allocated (say, over the past 10 years) … how much hasn’t been spent, and the state is paying on those bonds? Curious …