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Federal statutes, even given the broadest reading to which they are reasonably susceptible, cannot be said to pre-empt a state's power to impose its taxes on Indians not members of a Tribe.
In cases brought respectively by the Colville, Makah, and Lummi Indian tribes, and by the United States acting on behalf of the Yaki Indians, declaratory and injunctive relief was sought against the state of Washington in the United States District Court for the Eastern District of Washington. In the actions it was contended, among other things, that Washington's cigarette excise tax on the "sale, use, consumption, handling, possession or distribution" of cigarettes within the state, along with its general sales tax, could not lawfully be applied to cigarette sales by on-reservation tobacco outlets with which the tribes were involved on either a retailing or wholesaling basis, that the state should be barred from enforcing the tax, in particular from seizing, as contraband, untaxed cigarettes destined for delivery to reservations, that the state could not lawfully apply to Indian-owned vehicles its motor vehicle and mobile home, camper, and travel trailer excise taxes for the privilege of using such covered vehicles in the state, and that Washington's assumption of civil and criminal jurisdiction over the tribes' reservations was invalid. A three-judge District Court was convened, and it issued a consolidated decision concluding, among other things, that (1) the state cigarette tax could not be applied to on-reservation transactions because it was preempted by tribal taxing ordinances which the tribes had adopted with respect to on-reservation sales of cigarettes and constituted an impermissible interference with tribal self-government, (2) the general sales tax could not be applied to cigarette sales, (3) the state could impose certain record keeping requirements in connection with various tax-exempt sales, (4) the state could not impose its vehicle excise taxes upon vehicles owned by the tribes and their members, and (5) the state's assumption of civil and criminal jurisdiction over the Makah and Lummi tribes was unconstitutional. The state appealed.
Did the tribes’ taxing authority preempt the state’s authority to tax nonmembers of the tribes?
The court affirmed in part and reversed in part. The court held that jurisdiction was proper because the tribes' Commerce Clause claims were not insubstantial. The court held that the tribes' taxing authority did not preempt the state's authority to tax nonmembers of the tribes, and that the tax was reasonably designed to serve a legitimate governmental interest. The court held that the state's interest in enforcing its valid taxes was sufficient to justify the seizures of untaxed cigarettes. The court found that the state's excise tax on vehicles was no different from a personal property tax and was invalid as applied to vehicles used on the reservations.