The Hindu Business Line : An `unbalanced' fuel tax on the `Keepers of the Fire'

"WE THE Prairie Band Potawatomi people known as the `Keepers of the Fire' shall: Maintain, protect, and nurture our culture and spiritual and historic values through the celebration of its unique traditions, language, and sovereignty." Thus begins the `value statement' on www.pbpindiantribe.com, the site of Prairie Band of Potawatomi Nation.

Timeline on the site begins from 1400s with `first migration to Michigan's lower peninsula'. It seems the Odawas, Ojibwas and Potawatomi were initially a single tribe, known as `three fires' or `three brothers,' due to their similar way of life. "The Potawatomi referred to the American colonies as `13 Fires.' The Potawatomi and other tribes aided in the victorious uprising at Fort Recovery, Ohio," informs an entry against 1776.

You can read about darker developments such as the narrow passage of the Indian Removal Act in 1830; the Potawatomi relinquishing `the remainder of their initial 28 million-acre homeland in the Great Lakes area', three years later; and the reservation granted to Chief Shab-eh-nay in the Treaty of Prairie du Chien illegally sold through public auction by the US Government, in 1849.

`Reservation' closer home means different things. But, in the US, an Indian reservation is land that is managed by a Native American tribe under the US Department of the Interior's Bureau of Indian Affairs, as http://en.wikipedia.org explains. "Because the land is federal territory and Native Americans have limited national sovereignty, there are often legal casinos on reservations".

On timeline, this story is of December 6, 2005, when the US Supreme Court decided the case Wagnon, Secretary, Kansas Department of Revenue vs Prairie Band Potawatomi Nation. The dispute was that the Nation sought relief from Kansas State's tax on distributors delivering fuel to the reservation.

Kansas' motor fuel tax applies to the receipt of fuel by off-reservation non-Indian distributors who subsequently deliver it to the gas station owned by, and located in the Nation, informs the text of the judgment. "The station is meant to accommodate reservation traffic, including patrons driving to the casino the Nation owns and operates there. Most of the station's fuel is sold to such patrons, but some sales are made to persons living or working on the reservation. The Nation's own tax on the station's fuel sales generates revenue for reservation infrastructure."

When the tax tussle was at the District Court level, the decision went in favour of the State. Subsequently, "applying the interest-balancing approach described in White Mountain Apache Tribe vs Bracker (1980)," the Court of Appeals for the Tenth Circuit held that the Kansas tax is pre-empted because `it is incompatible with and outweighed by the strong tribal and federal interests against the tax'.

The court reasoned that the Nation's fuel revenues were derived from value generated primarily on its reservation — that is, the creation of a new fuel market by virtue of the casino — and that the Nation's interests in taxing this reservation-created value to raise revenue for reservation infrastructure outweighed the State's general interest in raising revenues. Aggrieved, therefore, it was the Kansas taxman at the door of the Supreme Court.

The apex court ruled that Kansas' motor fuel tax is a non-discriminatory tax imposed on an off-reservation transaction between non-Indians. Accordingly, it held that the tax is valid and poses no affront to the Nation's sovereignty. "Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Stevens, O'Connor, Scalia, Souter, and Breyer, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Kennedy, J., joined," informs the text.

A State that ignored the Nation

The dissenting opinion studied the assertion that "Kansas uses the proceeds from its fuel tax to pay for a significant portion of the costs of maintaining the roads and bridges on the Nation's reservation." Judge Ginsburg said, "The record reveals a different reality. According to the affidavit of the Director of the Nation's Road and Bridge Department, Kansas and its subdivisions have failed to provide proper maintenance even on their own roads running through the reservation. As a result, the Nation has had to assume responsibility for a steadily growing number of road miles within the reservation (roughly 118 of the 212 total miles in 2000)."

The judge added: "Of greater significance, Kansas expends none of its fuel tax revenue on the upkeep or improvement of tribally owned reservation roads... Kansas accords the Nation no dispensation based on the Nation's sovereign status. The Nation thus receives neither a state exemption so that it can impose its own fuel tax, nor a share of the State's fuel tax revenues."

Accordingly, the net result of invalidating Kansas' tax as applied to fuel distributed to the Nation Station would be a somewhat more equitable distribution of road maintenance revenues in Kansas, he opined but the majority carried the day.

Judge Ginsburg rued, however, "Today's decision is particularly troubling because of the cloud it casts over the most beneficial means to resolve conflicts of this order." By truncating the balancing-of-interests approach, the court has diminished prospects for cooperative efforts to achieve resolution of taxation issues through constructive intergovernmental agreements, said the judge, while resisting what he called an `unbalanced judgment'.

The verdict is yet to find a place on the Nation's site where in `news' what comes on top is `Pow Wow Celebration'. To wrap, here is a `Cherokee Saying' from www.shannonthunderbird.com: "When the white man discovered this country, Indians were running it. No taxes, no debt, women did all the work. White man thought he could improve on a system like this."

Tailpiece

"When I first heard the phrase `Clause 49' I was so clueless... "

"That you thought it was about `cost with reference to certain modes of acquisition' in Chapter IV?"

"No, I guessed it was a garment size!"

Detaxification@TheHindu.co.in

D. Murali

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