Lawsuit Accuses Washington Indian Tribes of Unfair Competition

Published June 18, 2010

Native American tribes in Washington are being accused of abusing tax rebates to gain an unfair advantage over gas stations not owned by the tribes.

Gov. Christine Gregoire (D) signed agreements with the tribes allowing them to use tax rebates to fix and maintain roads on their reservations. But a lawsuit filed by the Automotive Trades United Organization against the state alleges the tribes are using the rebates for other purposes, including undercutting gas stations outside the reservations.

The organization says if nothing changes, the state will lose $100 million a year in gasoline tax revenue.

Brandon Houskeeper, a tax expert at the Washington Policy Center in Olympia, agrees the tax agreements are helping the tribes take business away from other companies.

‘Economic Disadvantage’
“The Native American tribes say they need these agreements as a form of reparations, of making right the wrongs of the past, of giving them a ‘competitive leg up’ in trying to rebuild themselves, in trying to make themselves economically viable,” he said. “But the fact is—as the Automotive Trades United Organization is finding out—the governor has given them this opportunity to become economically sustainable at the cost of other Washington residents’ ability to be economically sustainable. “

The state Attorney General’s office has not offered a response to the lawsuit. An attorney representing the Colville Tribes also offered no comment on the lawsuit.

Toby Nixon, president of the Washington Coalition for Open Government, explained Gregoire had said if the state signed these financial arrangements, commonly called tribal compacts, Washington would end up with more tax revenue, not less.

“Essentially, the concept was that Washington would send the tribes this money, if they would collect the gas tax on the gas they sell, and Olympia [the state capitol] would then remit to them a huge tax rebate, but only if they would use this tax rebate money on keeping up their roadways within their reservations,” Nixon said.

Were Not Charging Tax
“The concept was that this would actually raise the price of gasoline on the reservations to the same level [as] off of the reservations, because previously the tribes were not charging the gas tax at all,” he added.

However, Nixon said the situation has not turned out as promised. Instead, “The tribes are taking the money Washington remits to them in the form of a rebate, because they are now ‘collecting’ the gas tax, and spending it in a very broad way by having a very broad interpretation of what ‘maintenance of roadways’ means. Also, the competing gasoline service stations that are near tribal stations are getting hit because the tribes are still charging less per gallon and taking customers away.”

Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.