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Reservation Casino Gets State Fuel Tax

It seems that a state can tax anything these days. The Supreme Court has recently ruled that the Prairie Band Potawatomi tribe’s gas station, located near their casino, will pay a tax on the fuel it sells and distributes. But the tax will not be put on this particular reservation alone. All Native American reservations within the state of Kansas will have to pay a fuel tax. And as reservations are known for their casinos, the tax will be paid by the casino patron’s business at the gas stations.

Justice Clarence Thomas wrote for the majority, stating that ‘Kansas law makes clear that it is the distributor, rather than the retailer, that is liable to pay the motor fuel tax. While the distributors are ‘entitled to pass along the cost of the tax to downstream purchasers, they are not required to do so.’ Although this state tax prevents the tribe from imposing its own tax, the state is only gaining a total of $300,000 per year. Casino patrons will be the main source for these tax revenues. The tribe maintains that they already collect taxes on fuel to help the state, primarily through its casino patrons. Justices Ruth Bader Ginsburg and Anthony M. Kennedy both argued that the tribe’s gas station was ‘effectively double-taxed’.

This matter presents the possibility of leaving these casino and gas station owners on the various Kansas reservations feeling frustrated. Only time will tell how the Native American reservations will be able to deal with this new law, and how their casino patrons will feel about this newly imposed tax.

OCA News Editor

Jenny McKinnley is OCA’s financial correspondent. After spending years on the trading floor in both NY and London, she offers insight from the inside out on world financial news and events.