Gov. Mary Fallin's office is negotiating new tobacco compacts with many of Oklahoma's Indian tribes. The changes being proposed stand to not only put nontribal retailers on more equal footing with tribal smoke shops, but to improve the health of tribal citizens.
Compacts in place since 2004, when voters approved an 80-cent increase in the tobacco tax to $1.03 per pack, established several tax rates for tribes. Included was a rate of just 6 cents per pack for smoke shops located near the borders, an effort to help them compete with lower-tax states.
A good many low-tax cigarettes wound up being sold at locations far from the border, particularly in the Tulsa area. Nontribal retailers were placed at a severe disadvantage. When the abuses were at their worst, the state lost out on more than $40 million per year in tax revenue that was supposed to be going to health-related initiatives.
Fallin's administration is pursuing tobacco compacts similar to those long in place regarding fuel sales — tribes pay the same tax rate as nontribal retailers and then get a rebate from the state. A handful of tribes have agreed to the new plan; Fallin's office is working to finalize deals with the remaining tribes whose compacts expired at the end of June.