State Begins New Effort to Tax Indian Tobacco ALBANY (wned) - Albany is trying again to collect taxes on tobacco sales on Indian reservations, this time taxing the merchandise before it gets to Indian territory.

Yesterday, the State Taxation and Finance Department began the long and complicated process of setting new rules for collecting the taxes.

Seneca Nation Tribal Councillor J.C. Seneca told WNED News that he spoke with Governor Paterson previously about the taxation, which he considers an "act of war against the Indian Nations within the state of New York and the Seneca Nation."

Despite years of effort and some violence on the Indian side, New York has never been able to tax the sales because they occur on what are treaty-protected sovereign lands.

There's also a court order barring the collections despite state law taxing the tobacco sales.

J.C. Seneca says there's a hole in the proposal, it doesn't cover cigarettes and other products actually made on Indian land.

© Copyright 2012, wned