Havre Daily News
Cigarettes bought on Rocky Boy's Indian Reservation may soon cost as much those purchased off the reservation.
The Chippewa Cree tribe is set to begin a cooperative tax agreement with the state on the taxation of cigarettes and tobacco products, which will raise the price of a pack of cigarettes by about $1.15. The agreement is expected to take effect Jan. 1.
Under the agreement, the tribe will enact a tax similar to the state's rate. The state will collect the tax and give it to the tribe. The state won't be taxing tribal members.
The new revenue will be used to pay off Rocky Boy's deficit to Contract Health Services, a program that covers the cost of off-reservation medical care for tribal members.
Rocky Boy gave control of the program back to the federal government in July after accumulating a $3.7 million deficit.
The tribe hosted a public meeting Wednesday with the state to discuss the tobacco tax agreement. The Rocky Boy tribal council met with representatives from Gov. Brian Schweitzer's office and the Montana Department of Revenue.
The 10-year agreement provides for collection and disbursement of the tax to the tribe and enforcement of the agreement.
“Cigarettes will be less than or equal to the outside market,” council member Brian “Kelly” Eagleman said after the meeting.
Under a previous agreement with the state, the tribe has an allocation of 18,000 cartons it can buy without paying state tax. Eagleman said the tribe sold the allocation and kept the revenues.
Deanne Sandholm, of the governor's office of budget and program planning, said there will be no more allocations with the new agreement.
The tribe raised its tobacco tax from 5 cents to 55 cents in January. State taxes also rose in January from $1 to $1.70. Under the new agreement, the tribe's tax will be about equal to that of the state. The new tribal tax has not yet been set.
The wholesale distributor will pay the tax, which will be collected by the state and returned to the tribe.
Sandholm said the agreement will give the tribe new, steady revenue and help keep untaxed cigarettes off the market.
The state has similar agreements with the Blackfeet, Crow, Fort Belknap and Fort Peck Indian reservations.
Chippewa Cree Development Corp. financial manager Bob Swan said he think the agreement is a good idea but has concerns as a businessman. He said he worries the agreement will hurt the bottom line for two businesses he manages for the tribe, Gramma's Market and Past Time.
Anna Whiting Sorrell, co-chair of the governor's American Indian Nations Council, said during the meeting that the agreement will add clarity to taxation issues and provide a steady source of revenue to the Chippewa Cree tribe.
The revenue will be earmarked to pay off a Contract Health Services deficit incurred over several years.
Contract Health Services is responsible for administering and paying for medical services tribal members receive off the reservation when they go because of an approved referral. CHS is meant only to fund health care if there is no third-party payer - Medicaid, Medicare or private insurance.
Tribal council member Jonathan Windy Boy, co-chair of the Rocky Boy Health Board, said the $3.7 million CHS deficit occurred when the “level of dollars received (from the federal government) almost flat-lined” as health care costs increased.
“Costs are increasing and the money hasn't caught up with that yet,” Windy Boy said after the meeting.
Once the deficit is paid, Windy Boy said, the tribe will hopefully take back control of the program.
According to the agreement, the state will collect the taxes on all tobacco or tobacco products sold on the reservation and remit the revenue to the tribe on a quarterly basis.