Blumenthal says tribe can't hide its sales tax
AG: Mashantuckets must clearly identify 1 percent surcharge
By Brian Hallenbeck Published on 9/10/2009
State Attorney General Richard Blumenthal called Wednesday on the Mashantucket Pequot Tribe to inform patrons that the retail shops at Foxwoods Resort Casino and MGM Grand at Foxwoods are charging a 1 percent “tribal tax” in addition to the 6 percent state sales tax.
”We are taking action today to demand that the tribe clearly identify this surcharge separately and distinctly from the state tax on all customer receipts and signage,” Blumenthal told reporters at a press conference in Hartford.
Blumenthal notified the tribe of the demand in a letter to Richard Sebastian, acting chairman of the Mashantucket Pequot Tribal Council.
”Specifically,” the attorney general wrote, “I request that the Tribe take appropriate immediate steps to clearly identify on all customer receipts that an additional 1 percent sales tax recently added by the Tribe is a Tribal levy, not imposed or received by the State.”
In a statement, the tribal council did not directly respond to the attorney general's demand, saying only that it was “in ongoing discussions on this matter with appropriate agencies and departments.”
The council said there is “no legal basis” for Blumenthal's claims.
The tribe imposed the new tax Sept. 1, adding it to the state sales tax. Since then, receipts have listed a 7 percent “tax” on the price of merchandise but have not identified the elements of the tax or otherwise mentioned a tribal tax.
Blumenthal said the tribe's failure to provide a breakdown of the 7 percent tax was “misleading and misinforming” consumers who believe that the entire amount collected is being remitted to the state.
At tribe-owned stores that are not required to collect state sales taxes, “the tribe is charging a 7 percent sales tax without identifying it as such,” Blumenthal said. “This practice easily and falsely leads patrons to assume that most or all of the tax goes to the state.” Instead, the tribe keeps all of the tax collected.
Blumenthal said the general rule is that the state charges no sales tax on items to which the tribe adds value, such as meals prepared on the tribe's reservation, including the casinos, or on goods and services manufactured or provided there.
While the tribe's authority to impose taxes has never been fully defined, he said, “by history and by law, the tribe can impose taxes on goods and services when it adds value (to those goods and services).”
Blumenthal called on the Foxwoods casinos to revise their receipts and to post signs at checkout counters explaining the 1 percent surcharge. He noted that the tribe's hotel-room bills already identify a 12 percent tribal occupancy tax as a tribal levy.
If the tribe fails to abandon the “potentially misleading or deceptive practices” he will “consider other measures” to force compliance, Blumenthal said, without elaborating.
”My sincere hope is that we can work cooperatively and remedy this important consumer issue to benefit the interests of the State, the Tribe and the public,” the attorney general concludes in his letter to Sebastian, who is acting as tribal council chairman pending a possible vote today to oust Chairman Michael Thomas from the council.
Thomas was placed on administrative leave Aug. 31 over a letter he e-mailed to tribal members outlining his plan for dealing with the tribe's financial difficulties. Tribe and Foxwoods officials have said the council approved the imposition of the tribal tax in January and that the move was unrelated to the tribe's finances.