SEVEN PERCENT SALES TAX AT MASHANTUCKET PEQUOTS?

Foxwoods charging customers 7 percent sales tax
Mashantuckets pocket extra 1 percent at hotels, stores.
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By ADAM BOWLES
Norwich Bulletin
Posted Sep 02, 2009 @ 10:57 PM

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.For the first time since it opened in 1992, Foxwoods Resort Casino and MGM Grand at Foxwoods have begun collecting a 1 percent sales tax on goods sold at all retail outlets and on hotel room bookings in addition to the required state sales tax.

The increase went into effect Tuesday.

The change has prompted the promise of an immediate review by state Attorney General Richard Blumenthal, who also said the new policy may lead to an investigation by his office.

“So far as we know, this new practice has never been cleared or approved by the state,” he said. “It may be problematic if it seems to represent the tax as being a state levy. Most people seeing the word ‘tax’ would assume it’s imposed by the state, but obviously they’ve added a surcharge that has gone to the tribe. We want to know how it is represented and how the tribe justifies calling it a tax.”

Also under review is whether the reservation can impose a tax at all. While there’s no limit to how much a vendor can charge for goods and services, only the state is allowed to collect a sales tax outside the reservation.

The tax change at Foxwoods means the total price on an item purchased at a store would include the existing state sales tax of 6 percent and an additional 1 percent sales tax that goes directly to the tribal enterprise.

Spokesman Lori Potter stressed that the tax change was not a reaction to recent news of the Mashantucket Pequot Tribal Nation’s financial troubles. The tribe operates the casino.

“This was decided about nine months ago,” she said.

Potter said it depends on the vendor whether the sales tax is specifically noted in the receipt.

Sarah Kaufman, spokesman for the state Department of Revenue Services, said her department did not have enough details about the situation to directly answer legal issues connected to the increased tax.

Kaufman said the department’s legal counsel is reviewing the change.

At Mohegan Sun, businesses collect state sales tax only, which complies with the terms of the casino’s bank and bond agreements, said Jeff Hartmann, chief operating officer.

“We mirror the state’s tax laws in terms of sales tax rates,” Hartmann said.

The increased sales tax comes as Foxwoods is seeking to stabilize its crumbling financial situation with a restructuring of $2.3 billion in debt.

Amid the turmoil, Tribal Council Chairman Michael Thomas has been put on administrative leave pending an internal review of personnel matters of which the tribe has declined comment.

Thomas had notified tribal members that earnings are “down considerably” in the recession with no signs of immediate improvement and with further pressure from the threat of increased competition in Massachusetts and New York.