Tribal chairman criticizes city on sales tax issue
In a Saturday event open to the public and hosted by the Pottawatomie County Democrats, Citizen Potawatomi Nation Tribal Chairman John “Rocky” Barrett addressed the sales tax issue in detail.
In February, the city sent a letter to tribes, asking they enter into an agreement that would entitle the city to sales tax from sales to non-tribal members at tribal entities. Barrett informed Saturday’s audience the issue was already decided and litigated in 1991.
“We spent about a half a million dollars in Oklahoma Tax Commission versus Citizen Potawatomi Nation, which is the precedent case of taxation of an Indian tribe by a state,” he said.
Barrett explained an Indian tribe cannot be forced to collect taxes for a city, because of federal preemption, tribal sovereignty, United States Supreme Court case precedent and federal law. He did say the city could tax purchases of its citizens, anywhere.
“If you get in your car and you drive down to Costco in Lewisville, Texas, and you pay a 6 percent tax in Lewisville, Texas, you owe the City of Shawnee and the Oklahoma Tax Commission another 2.5 percent of tax; the difference between 8.5 and the 6, on the used tax portion of your tax return,” he said. “And I know every one of you is filing that on a regular basis.”
The audience laughed. In the audience were City Commissioners Pam Stephens and Linda Agee. During commission meetings, both commissioners have prompted further discussion regarding the sales tax issue and opposed some agenda items that were unfavorable to the tribes regarding the matter.
“I would like to publicly thank Pam Stephens for her courageous vote in the city commission against that and Linda Agee for her courageous vote. Both of these ladies, I think, did their homework and found out what the basis for the law really is about the taxation of Indian tribes and the legal status of this territory out here, and I’m grateful for that informed vote,” Barrett said.
He also acknowledged Lesa Shaw, unopposed Ward 5 city commission candidate.
“I’m grateful for her efforts,” he said.
Barrett said the Commerce Clause of the United States Constitution states only congress has the right to regulate commerce between the Indian tribes.
“This place you’re sitting now is not in Oklahoma. It is not in the City of Shawnee. It is in the Citizen Potawatomi Nation since 1867,” he declared.
Barrett said the real issue is that the city wants the tribe to charge an additional 3 percent sales tax, for the city, on top of the tribe’s 8.5 percent sales tax, which helps fund the tribal police force, among other things. He said the matter is not exclusive to the tribe and is even pertinent to online retailer Amazon.
“Used tax applies to all of you, all of us, but having a right without a remedy does not authorize a lawsuit against the Citizen Potawatomi Nation,” he said. “It reflects the inability of the city to exercise its tax jurisdiction outside of areas where it has authority, and that’s what is at issue here. “
The tribe does give Tecumseh a 3 percent sales tax. Barrett said it is a reciprocal gift and the right thing to do, as the tribe purchased a piece of land within Tecumseh city limits and put it in a trust.
“This piece of land has never been in Shawnee, ever,” Barrett said. “Plus, the City of Tecumseh doesn’t fight us every time we turn around.”
Barrett said the city’s claims of a declining sales tax income are false.
“The information that’s being sent to the Oklahoma Tax Commission, that we got copies of, show that the City of Shawnee’s taxes are going up. In the last 15 years, they’ve had one year, 2009, where their tax collections went down, and that was the worst year of the economic depression,” Barrett said.
Barrett believes the solution the city needs to seek is in Congress; it is not in the court.
“Because if we spent half a million dollars on a lawsuit in 1991, the City of Shawnee is going to spend a million dollars of your money, fighting a lawsuit they’re going to lose,” he said. “Because even if they win, even if the courts say ‘You’ve got to pay the taxes,’ there are two other federal statutes.”
Barrett described one statue that states if a tribal entity is deemed a gaming site, all other commercial activities are not taxable by the state. He also said there is nothing in the law to prevent the tribe from collecting tribal taxes and pricing groceries however they want.
“So, a 60 cent can of green beans can be 59 cents worth of tribal tax and a penny for the green beans and we’ll pay Shawnee 8.5 percent of the penny,” he said to an amused crowd. “If they win, they’re going to lose. All they’re doing is creating enemies. All they’re doing is stopping progress.”
Barrett said it is currently against the law for the city to try to sue and collect taxes from the tribe.
“We have other things to do and other resources that need to be going to help this town,” Barrett said. “We need to build a better Shawnee, that’s what we need to do. We don’t need to be suing Indian tribes.”