A proposed $1.25 tax on Wisconsin cigarettes may push smokers to tribal reservations or across state lines to fuel their fix.
The tax could affect Wisconsin businesses and reservations, depending on whether or not tribes change tax policies.
Currently, most tribes have the same tax as the state on cigarettes sold on their reservations, but this could change with a tax increase.
Mike Prentiss, spokesperson for state Sen. Scott Fitzgerald, R-Juneau, emphasized the possibility of consumers running to reservations to purchase cigarettes while Wisconsin businesses suffer if the tax is lower on reservation land.
""I know it's a concern that's been raised by some legislators and others about possibly creating an unfair situation for little corner shop 7-eleven type places competing with a tribal business that's selling cigarettes for $1.25 less a pack,"" Prentiss said.
Outcomes would differ greatly for both businesses and tribes depending on whether tribes decide to keep or drop the tax.
""We're not talking about corporations in the state, we're talking about different jurisdictions, different entities with a measure of sovereignty,"" said Richard Monette, law professor at UW-Madison.
Ryan Parsons, research associate for Wisconsin Taxpayer Alliance, the organization that aided the original agreement between state and tribes over cigarette tax, said the opposite is also possible if tribes maintain the same tax as the state.
""The concern is that with the big increase they could lose some of their competitiveness to sources that aren't collecting the tax whether it's smuggling from states with a lower tax or Internet sales,"" Parsons said.
Businesses near state borders could suffer as well, Prentiss pointed out.
""You're going to have people near borders going across state lines because the cigarette taxes in those states are going to be so much lower than ours,"" he said. ""So it really does create a whole host of problems for small business people in Wisconsin.""
