The days may be numbered for Lower Valley residents to buy discounted price cigarettes at the Mabton Smoke Shop.
The state of Washington yesterday announced that it is going to pull the plug on a cigarette tax agreement with the Yakama Nation. The state is taking the action after it says it found that cigarettes continued to be sold on the reservation without valid tribal tax stamps, in violation of the agreement.
Mike Gowrylow with the state's Department of Revenue said the Nation's self-imposed tax stamp in the agreement was intended to maintain a competitive balance for non-tribal cigarette sellers.
Gowrylow said the Mabton Smoke Shop is owned by a tribal member and sits on tribal lands. As a result, it would be impacted by the contract, or compact, termination.
That's even though, Gowrylow says, the Mabton Smoke Shop has apparently been in compliance with the contract.
"The whole concept is to make it more competitive," Gowrylow said. "For the Tribe to impose its own tribal tax to reduce its competitive advantage with non-tribal retailers."
Under the agreement, reached in 2004, the Nation was to ramp up the tax and put it back into the tribal coffers so that within three years it would be equal to the amount of state tax non-tribal shops have to charge.
Similar agreements have been signed with 17 other tribes, while the Puyallup Tribe signed a separate agreement that permitted a lower tax rate but required the Tribe to share 30 percent of its profits with the state.
Gowrylow said the state has been monitoring the Yakama Nation's compliance with the cigarette compact, including doing sample buys. He said there are repeated instances where the Yakama Nation is selling cigarettes without the appropriate tribal tax stamp.
"We've been trying to work with the Tribe for sometime," he said of the contract violations. "We entered into the contract with good faith and it's disappointing to see this happen."
The Nation has 10 business days to seek mediation in appealing the state's decision.
If the Yakama compact is terminated, sales of cigarettes to non-tribal members will again be considered contraband sales subject to state and federal enforcement.
In addition, any non-tribal member buying cigarettes from Yakama Nation smoke shops, like the one in Mabton, would be breaking the law and subject to a $10 fine per pack of cigarettes purchased or a $250 fine, whichever is greater.
Dorothy Young works at the Mabton Smoke Shop and said she doesn't know what will happen next, referring all questions to Manager Deb Morales, who was unavailable for comment.
Without a compact with the state, Gowrylow said the only way the Mabton Smoke Shop and other Yakama Nation smoke shops could sell cigarettes to non-tribal members is by assessing the state stamp tax.
But he's doubtful that would happen, since, according to the state, the Nation isn't even assessing its own required tax on cigarette purchases.
"If they did that, then nobody would be breaking the law," Gowrylow said. "But the issue is they are in widespread non-compliance (with the state agreement)."