The Oklahoma Grocers Association reportedly is concerned about compact negotiations between the governor's office and an Indian tribe regarding what sort of tax the tribe will pay on tobacco products. The group is right to be a bit uneasy.
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Mike Thornbrugh, spokesman for Tulsa-based QuikTrip Corp., tells the Tulsa World that the governor's office is considering giving the Muscogee (Creek) Nation a tax break that's greater than those now in place for tribes that have entered into compacts with the state. The Creeks do not presently have a tobacco compact.
Thornbrugh has been critical of the compacts since before voters approved the new tobacco tax in 2004, and the numbers underscore why. The net 55 cents-per-pack increase requires nontribal retailers to pay a tax of $1.03 per carton; under the compacts, the rate for tribal shops can range from 6 cents to about 87 cents per pack. Noncompacted tribes are supposed to pay 76 cents per pack.
The lowest tax rate is reserved for tribes with shops along the border to help them compete with states that have lower tax rates than Oklahoma. However, some tribal retailers have been shipping cigarettes with 6-cent stamps to stores away from the border, resulting in far less tax revenue being generated than was expected. Figures from the Oklahoma Tax Commission show tribal tax revenue in August totaled just $1.9 million on the sale of more than 12 million packs. Nontribal revenue was $15.8 million on 15.6 million packs sold. Since the tax went into effect, nontribal retailers have accounted for 88 percent of the tax revenue generated.
"All we want is a level playing field," a lobbyist for the grocers said this week. The state has taken some steps, such as enacting rules designed to curb the number of 6-cent stamps. But as the revenue figures plainly show, more must be done.
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