Negotiations continuing with state over tobacco tax


Representatives for the Osage Nation are continuing efforts to reach a new tobacco agreement with the State of Oklahoma following a conference in Oklahoma City with the lead attorney for Gov. Mary Fallin.

Osage Nation Attorney General Jeff Jones met with Fallin chief counsel Steven Mullins last week to discuss the tribe’s tobacco compact with the state, tribal officials said.

Since expiring earlier this year, Oklahoma’s tobacco tax agreements with the Osage Nation and most of the other tribes in the state have been continuing on three-month extensions.

New procedures proposed by Fallin call for Indian smoke shop vendors to remit all tobacco tax revenue to the state, which 30 days later would return an agreed-to percentage — reported in the Osage proposal to be 50 percent.

The Osage Nation recently hired an independent tax consultant to assist with ongoing negotiations on the state tobacco compact, officials added.

So far, Fallin’s office has reached agreements with five of the tribes whose compacts were due to expire — the nearby Otoe-Missouria and Kaw, as well as the Cheyenne-Arapaho, Apache and Ft. Sill Apache. More than two dozen other tribes are currently involved in similar negotiations.

Tribal officials reportedly are concerned about the state’s refusal to continue including a “most-favored nation” clause — allowing a tribe the option of using provisions from another tribe’s compact — in the new agreements.

Previously, tribes had been taxed at several different rates, ranging from 26 cents to more than $1 per pack as negotiated in their four-year state compacts. Smoke shops located within 20 miles of the Oklahoma’s borders with Kansas and Missouri generally paid substantially lower rates.

Fallin is proposing that all tribes now be taxed at a rate of $1.03 per pack and asks that Indian smoke shop operators send all of the collected tobacco tax revenue to the state, which would issue rebates for half of the total amount.

Some operators have complained that such a system would severely impact the revenue they have available for operating their businesses.

Six independent tobacco businesses are currently operated on Osage land, a tribal spokesman said.

Osage Nation Assistant Chief Scott Bighorse has said there is a “basic lack of trust on both sides” regarding the tobacco tax agreements between the state and tribes.