N.Y. Governor seeks U.S. enforcement on reservation taxes

New York State Governor David Patterson speaks at a news conference near the Emergency Training Center in Cheektowaga, New York February 13, 2009 in response to a Continental Flight 3407 that crashed with no survivors.

NEW YORK (Reuters) - New York Governor David Paterson on Wednesday said his administration was contacting federal law enforcement agencies over the state's failure, over 30 years, to collect taxes from stores on Native American reservations.

This is a new strategy for the state, which loses around half a billion dollars a year because its governors have been unable to collect taxes on tobacco and fuel from reservation stores despite a series of court battles and legislation.

But it is unlikely that the federal government will resolve this thorny problem in time to close the state's more than $3 billion deficit or avert a cash crunch that hits in December.

"It is a question of law enforcement, that's why we are approaching federal law enforcement," the Democratic governor told a Webcast meeting with legislative leaders.

Other states have the same problem, Paterson said, estimating no state had gotten more than $75 million a year in these kinds of taxes. Native American tribes say their immunity from taxes springs from their status as sovereign nations.

New York's last serious enforcement effort dates back to 1997, when former Republican Governor George Pataki backed down after 12 state troopers were injured during tire-burning protests by two upstate tribes.

Last year, cigarette-maker Philip Morris supported a state Assembly bill to solve the problem by collecting the levy from wholesalers who sell cigarettes to reservation stores and New York City Mayor Michael Bloomberg sued eight Native American reservation stores on Long Island over the issue.

(Reporting by Joan Gralla; Editing by James Dalgleish)