Despite Order, Smokes on Sale at NY Reservation

A court order hasn't stopped a brisk business in tax-free cigarettes on a New York Indian reservation.

RETRANSMITS graphic that moved Sept. 15. Graphic shows cigarette sales to Poospatuck reservation over time.

(AP)

Customers looking for cheap smokes filled the narrow lanes of the Poospatuck Reservation on Long Island Friday, even as an injunction took effect shutting down some of the tribe's biggest smoke shops.

There are about 14 cigarette stores on the small reservation. A federal court order took effect Friday barring at least five shops from selling tax-free cigarettes to anyone who isn't a member of the tribe.

Those stores, which collectively sell millions of cartons annually to people looking to evade the nation's highest cigarette taxes in nearby New York City, appeared to have closed.

At one, the Peace Pipe smoke shop, a woman stood at the door turning away a steady stream of would-be customers.

The court injunction, however, was limited. It only applied to one group of shops that New York City sued.

Other smoke shops not included in the lawsuit weren't covered by the order and were still in business. Flaggers directed a steady stream of customers into their parking lots on Friday.

Employees at several shops refused to speak with The Associated Press and referred questions to Harry Wallace, the chief of the Unkechaug tribe.

Wallace, who has, for years, argued that the state can't force sovereign tribes to collect state taxes in their territory, said he is confident the injunction will eventually be lifted.

"We will win," he said, adding that the tribe was "in compliance with the court order."

New York Mayor Michael Bloomberg sued eight shops on the reservation last year, saying their tax-free sales were illegally cheating the state and city out of hundreds of millions of dollars in revenue.

Cigarette prices vary by brand and vendor in the city, but a carton of Marlboros, which includes 10 packs, costs around $95. That includes a state tax of $2.75 per pack and the city's tax of $1.50 per pack.