Dan's Papers -November 20, 2009

Newsday blared giant headlines on its front page last Monday for a lead article that read, SAVED BY CIGARETTES-THE TRIBE FEARS REVENUE WILL GO UP IN SMOKE.

The essence of the article is that the big bad federal government is attacking this tiny eastern Long Island tribe of 280 Unkechaug Indians, just at the time it is starting to prosper with the revenue from its little smoke shops. At these shops, they sell cartons of cigarettes tax-free to the general public.

The tribe lives in near-poverty on a small 55-acre lot composed of 35 small houses and 65 trailers in Mastic, Long Island. Tribal members used to range over much of Long Island, but then the white men came. Now they have just this small acreage along Poospatuck Lane where they make a modest living selling cigarettes.

Numerous tribes on Long Island sell cigarettes from stands, but the Feds are focusing on just the Unkechaugs, Newsday says. And it's true. The Unkechaugs were just about to begin building a community center. Now the Feds want to shut down their only livelihood: their smoke shops. It makes no sense. Or does it?

The idea from Newsday's perspective comes from the theory that more people will snap up the paper with this on the front page. UNKECHAUGS CREDIT CIGARETTE SALES FOR EASING POVERTY, a subhead reads. INDIANS IN MASTIC VOW TO FIGHT EFFORTS TO HALT BUSINESS. The Unkechaugs say the Feds are attacking just them because they are the weakest link. Soon, they will be after all the tribes.

I have often said that you shouldn't believe everything you read in the newspapers-or see on TV either. With newspapers, read between the lines. Or in this case, all you have to do is read the lines.

The Unkechaugs have been selling cigarettes tax-free on their land since 1991, the article says. The first smoke shop was opened by tribal chief Harry Wallace. In recent years other smoke shops have opened on the reservation. (The Shinnecock Reservation in Southampton has had two smoke shops since the 1960s). Now there are more than a dozen smoke shops on the Unkechaug Reservation.

One month ago, though, the City of New York went to court and won an order requiring the smoke shops on this reservation to either charge the tax or shut down. Over the last five years, the city claims it has lost hundreds of millions in sales tax because of the tax-free cigarettes being sold in Mastic.

Here's the interesting part. The city presented evidence in court that wholesalers sold the Unkechaugs more than five million cartons of cigarettes last year. The Unkechaugs resell them. The retail prices range from $28 to $45 a carton, according to the hand-painted wooden signs on the shops (published in Newsday). The loss to the City of New York in unpaid taxes amounted to $157 million just last year.

A little math: Five million cartons equals 20,000 cartons for each man, woman and child on the reservation per year. It also equals half a million cartons for each smoke shop. Selling these cartons for about $35 a carton-without the sales tax-brings in, in cash or by credit card, $175 million a year to the Unkechaugs. Since a retailer typically only keeps about half of what he sells something for, this would mean the smoke shops net $87 million a year. Divide this by 100 families. You get $850,000 per Indian family as income per year.

Don't get me wrong. I am in favor of the 10 Indian tribes on Long Island selling tobacco to the general public from smoke shops on their property. And I am in favor of them making as much money as they can. The thing is, though, that the money is obviously not getting down to the Indians.

On the other hand, the city is arguing that the sale of this number of cartons every day is not a result of a bunch of customers driving up and getting a carton or two over the counter every day. There's something else going on, possibly involving racketeering and bootlegging. A judge agreed with them, and whatever this is it's not good for the Indians and it's going to ruin everything for all the Indian tribes who have been selling cigarettes tax-free from stands as small-time operations all these years.

Newsday asked the tribe's treasurer, Thomasina Mack, 43, where matters would stand if the tribal smoke shops shut down (one of which already has) because of the ruling.

"Oh my God," she said, "we'd probably go back to being dependent on the state."

Tribal chief Wallace showed the plans for the community center. Now that won't happen.

Newsday wants you to feel angry about what is being done to the Unkechaugs. And you should feel angry about it. But it's a whole something else. And the rest of the Indian tribes wish it had never come to this.