American Indian Tribe Miffed by Bloomberg Remark Sues to Block N.Y. Cigarette Tax

New York City Mayor Michael Bloomberg speaks during his endorsement of Washington D.C. Mayor Adrian Fenty in Washington Aug. 17. (Reuters Photo)

A Native American tribe that got into an unusual war of words with New York City Mayor Michael Bloomberg and the entire state government last week has asked a federal judge to step in and settle a dispute over cigarette taxes.

The Seneca Nation of Indians, one of six tribes in the state, on Friday filed a motion in U.S. District Court urging the judge to block the state from collecting millions in taxes on normally tax-free cigarettes sold by the tribes.

The court action came after efforts to reach a truce with Gov. David Paterson fell through.

"We had hoped to come to an understanding where the parties would have an orderly and agreed upon processing of the merits of our claims. Unfortunately, the Nation now finds itself in the position of needing emergency relief from the federal courts to keep the state from implementing this illegal tax scheme," President Barry Snyder said in a statement.

The dispute over the tax, set to go into effect Sept. 1, drew attention last week after Bloomberg said on a radio show that Paterson needs to grab a "cowboy hat and a shotgun" and demand the money himself.

The Seneca Nation reacted harshly, demanding that the mayor either apologize or resign, calling on Paterson to distance himself from Bloomberg and threatening to pursue a hate crimes case against him.

Bloomberg's office said no apology or resignation would be forthcoming and that the tribes should just "follow the law."

The tax on the tribes is part of a broader statewide cigarette tax hike expected to pull in about $440 million for New York's in-the-red budget.

But the tribes say the new tax on wholesalers is illegal and would hurt business. When the state tried something similar in 1997, Native Americans in New York protested on the New York State Thruway, blocking the road and setting tires on fire.

"Bottom line is they lack the authority to do this," said J.C. Seneca, a Seneca Tribal Council member who also sells cigarettes. "It would hurt business. It would hurt my business, it would hurt everybody that's in the business."