State Plans to Terminate Cigarette Tax Compact with Yakama Nation - NBC Right Now/KNDO/KNDU Tri-Cities, Yakima, WA |

State Plans to Terminate Cigarette Tax Compact with Yakama Nation

YAKIMA, Wa -  The state announces plans to end its cigarette tax compact with the Yakama Nation.  This decision comes after frustration with tribal leaders for continuing to allow cigarettes to be sold on the reservation without valid tax stamps.

The Nation has ten days to request a mediator to review the basis for termination.  If the compact is terminated, all cigarette sales without tax stamps to non-tribal members will be considered illegal sales.

"Well, obviously we're disappointed.  We fully expected two years ago that the tribe would put valide tribal tax stamps on cigarettes at indian smoke shops, but that hasn't been the case," says Mike Gowrylow of the State Department of Revenue. 

KNDO called the Yakama Nation for a response, but tribal leaders were not available. 

If the compact is terminated, non-tribal members caught with tax free cigarettes face at least a $250 fine.

Gowyrylow says the Nation is currently required to impose the same amount of tax as the state on all cigarettes sold to non-tribal members, But he says the Nation gets to keep the money.

The state now wants offer new agreement where the tribe charges 70-percent of the state tax on cigarettes -- and gives the state 30% of that money.  This way they still give their businesses a tax advantage, but they don't get to keep all of the money.