NY Senacas seek US troops to ward off cig taxes

NEW YORK, Jan 13 (Reuters) - The Seneca Nation said on Tuesday it is taking steps to stop New York state from imposing taxes on cigarettes sold by reservation stores, invoking a 1794 treaty that allows the tribe to seek the protection of federal troops.

New York Gov David Paterson on Dec. 15, 2008 signed a law barring wholesalers from selling untaxed cigarettes to the tribe.

A spokeswoman for the Democratic governor said he wanted to "fundamentally" transform the state's relations with the tribes. "The tax collection issue is one of several issues that the governor would like to address as he moves forward to negotiate with all of the Indian nations in good faith," she added.

The Senecas have prepared for a blockade, Seneca President Barry Snyder said in a statement.

The Native Americans are advising their members to stockpile basic necessities and setting aside $1 million to hire "emergency response personnel" to provide medical care, ensure children can get to school and protect members from state interference in daily activities.

"Given our history that the state twice tried to interfere with our treaty rights to tax-free commerce, the only responsible approach is to protect our people by preparing for the worst," Snyder said.

Next week, the tribe will ask President-elect Barack Obama to send "federal troops in the face of the state's threatening ways and past history of aggression," he said, in line with provisions of the 1794 Canandaigua Treaty.

Paterson is the third governor to try to stop Native American tribes from selling untaxed cigarettes to people who are not tribal members.

New York loses hundreds of millions of dollars a year by failing to collect the cigarette taxes, and anti-smokers, such as New York City Mayor Michael Bloomberg, want the law enforced.

Convenience stores complain that they cannot compete with tribal stores.

The Senecas are a sovereign nation, the root of their claim to be immune from taxes. They say their shops generate $313 million a year and employ more than 1,000 families.

State Supreme Court Justice Rose Sconiers temporarily blocked the cigarette tax collections and set a hearing for Jan. 27 on whether she should issue a permanent injunction.

The Native Americans are also planning to collect tolls on the New York Thruway in Irving, near Lake Erie, south of Buffalo, the statement said.

New York owes the Senecas more than $20 million for failing to pay a $1 fee imposed on Thruway drivers since May 2007, Snyder said. (Reporting by Joan Gralla in New York, Editing by Dan Grebler)