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Osage tobacco pact signed by governor

A new Tobacco Tax Compact with the Osage Nation was signed Oct. 31 by Oklahoma Gov. Mary Fallin, whose office held firm in its insistance that the state’s tribal smoke shop operations be required to accept a tax-rebate system before approving the 10-year pacts.

Prior to approving the state’s tobacco-tax proposal, the Osage Nation Congress had voted to establish a revolving fund that designed to aid the half dozen independent retailers who operate smoke shops within the tribal borders.

The tax-rebate plan calls for tribes to provide up-front payments to the state to cover all the taxes on tobacco-product sales. A month later, rebates are to be given by the Oklahoma Tax Commission according to the agreed-upon percentage of the compact.

Several state tribes have reported that the state tax commission sometimes takes as long as 60 days to rebate the smoke shop tax revenue.

Officials of the Osage Nation Tax Commission had called upon the ON Congress to establish a $300,000 revolving fund to assist the Osage retailers in adjusting to the tax-rebate proposal. The fund, which will serve as a float bank,is to be administered by the Osage Nation Treasurer.

The so-called Tax Relief Fund is to provide relief to eligible retailers for their pre-payments to the state on taxes related to cigarettes and other tobacco products. It is designed to replenish cash flow for the retailers in lieu of the refund payments, which the state will then be making directly to the Osage Nation.

Principal Chief John Red Eagle signed the tobacco-fund legislation on Oct. 30 and it was to become effective upon the signing of the revised compact by Gov. Fallin.

Under its new agreement, the Osage Nation will receive 70 percent of all Compact Taxes collected on cigarettes and other tobacco products until Dec. 31, 2014. That amount is then to become 65 percent through 2015,then 60 percent through 2016 and 50 percent until the end of 2023.

Penalty provisions have been written into the new compacts to discourage tribes from violating terms of their agreements.

Reports for 2011 showed that more than 3.5 million cigarettes were sold that year through Osage Nation retail operations.

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