BP BHEAD INT H [atlas:bill]

AN ACT Relating to cooperative agreements between the governor in regard to taxation of cigarettes sold within Indian country; adding new sections to chapter 43.06 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.24 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature intends to further the government-to-government relationship between the state of Washington and Indians in the state of Washington by authorizing the governor to enter into cooperative agreements concerning the sales of cigarettes. The legislature finds that these agreements will provide a means to promote economic development, provide needed revenues for tribal governments and Indian persons, and enhance enforcement of the state's cigarette tax law, ultimately saving the state money and reducing conflict.

NEW SECTION. Sec. 2. A new section is added to chapter 43.06 RCW to read as follows:

(1) The governor may enter into cooperative agreements concerning the sales of cigarettes with any Indian tribe or with a self-governing dependent Indian community. All cooperative agreements shall meet the requirements for cooperative agreements under this section and section 3 of this act.

(2) Cooperative agreements shall be in regard to retail sales in which tribal retailers make delivery and physical transfer of possession of the cigarettes from the seller to the buyer within the Indian lands. In addition, cooperative agreements shall provide that tribal retailers shall not sell or give, or permit to be sold or given, cigarettes to any person under the age of eighteen years.

(3)(a) A cooperative agreement with a tribe shall provide for a tribal cigarette tax in lieu of all state cigarette taxes and state retail sales and use taxes on sales of cigarettes on Indian lands by tribal retailers. The tribal cigarette tax shall apply to all sales of cigarettes to all purchasers. The tribe may allow an exemption for sales to tribal members.

(b) In addition to the other requirements of this section, a cooperative agreement with a self-governing dependent Indian community is conditioned on (i) dedication of an amount equivalent to the state cigarette and state retail sales and use taxes to support education, and (ii) a means for the department of revenue to determine eligibility for the exemption from tax under sections 4, 5, and 6 of this act.

(4) Cooperative agreements shall provide that all cigarettes possessed or sold by the tribal retailer shall bear a tribal cigarette tax stamp obtained by wholesalers from a bank or other suitable stamp vendor and applied to the cigarettes to implement and institute a compliance program.

(5) Cooperative agreements shall provide that the tribal retailers shall purchase cigarettes only from:

(a) Wholesalers or manufacturers licensed to do business in the state of Washington;

(b) Out-of-state wholesalers or manufacturers who, although not licensed to do business in the state of Washington, agree to comply with the terms of the cooperative agreement, are certified by the tribe or self-governing dependent Indian community to the state as having so agreed, and who do in fact so comply. However, the state may in its sole discretion exercise its administrative and enforcement powers over such wholesalers or manufacturers to the extent permitted by law;

(c) A tribal wholesaler that purchases only from a wholesaler or manufacturer described in (a), (b), or (d) of this subsection; and

(d) A tribal manufacturer.

(6) Cooperative agreements shall be for renewable terms of no more than eight years.

(7) Cooperative agreements may provide for the payment by the tribe or self-governing dependent Indian community to the state of Washington of a portion of the tribal cigarette tax collected under the agreement. All proceeds received by the state under section 3 of this act must be deposited in the county development account, hereby created in the custody of the state treasurer. Expenditures from the account may be used only for public facility expenditures in the county in which the cigarettes are sold. The proceeds shall be earmarked in the account and distributed back to the specific county under procedures established by the department of community, trade, and economic development. The county is eligible for money in the account if the money will be used for a public facility as defined in RCW 82.14.370. Only the director of the department of community, trade, and economic development or the director's designee may authorize expenditures from the account. Moneys in the account are not subject to appropriation.

(8) Cooperative agreements may permit the submission of disputes regarding the interpretation and administration of their provisions for judicial resolution, and, if such submissions are agreed, shall include provision for a limited waiver of sovereign immunity and consent by the state for the resolution conditioned upon a similar limited waiver of sovereign immunity by the Indian tribe or self-governing dependent Indian community, which waiver shall be approved or otherwise confirmed by the United States as may be required by law.

(9) The governor may delegate the power to negotiate cooperative agreements to the department of revenue.

(10) For purposes of this section and section 3 of this act:

(a)"Essential government services" means fire, police, public health, education, job services, sewer, water, transportation, utility services, and economic development;

(b) "Indian lands" means all land within the exterior boundaries of a reservation and land held in trust for a tribe or tribal member by the United States;

(c) "Tribal retailer" means (i)(A) a retailer wholly owned and operated by an Indian tribe or (B) a business wholly owned and operated by a tribal member and licensed by the tribe; or (ii) in the case of a business located on trust land of a self-governing dependent Indian community, a business owned and operated by the Indian person or persons in whose name the land is held in trust;

(d) "Indian tribe" or "tribe" means a federally recognized Indian tribe; and

(e) "Self-governing dependent Indian community" means a self-governing dependent Indian community identified as such by an act of Congress.

NEW SECTION. Sec. 3. A new section is added to chapter 43.06 RCW to read as follows:

(1) The tribal cigarette tax, which is in lieu of the state cigarette and state sales and use taxes, as provided in section 2(3) of this act, shall be negotiated according to rates, revenue sharing, and disposition of proceeds as follows:

(a) An Indian tribe that agrees to impose one hundred percent of the state taxes shall retain one hundred percent of the tax proceeds, with the tax proceeds exclusively dedicated to essential government services.

(b) An Indian tribe that agrees to impose under one hundred percent but at least ninety percent of the state taxes shall retain eighty percent of the tax proceeds, with the tax proceeds exclusively dedicated to essential government services. Twenty percent of the proceeds shall be transmitted to the state treasurer for deposit in the rural county development account.

(c) An Indian tribe that agrees to impose under ninety percent but at least eighty percent of the state taxes shall retain seventy percent of the tax proceeds, with the tax proceeds exclusively dedicated to essential government services. Thirty percent of the proceeds shall be transmitted to the state treasurer for deposit in the rural county development account.

(2) This section does not authorize agreements in which a tribe imposes less than eighty percent of the state taxes under section 2(3) of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 82.08 RCW to read as follows:

The tax levied by RCW 82.08.020 does not apply to sales of cigarettes made by an Indian tribe or a tribal retailer during the effective period of a cooperative agreement under section 2 of this act entered into between the state and the Indian tribe or the tribal retailer. Cigarettes sold by a tribal retailer as defined in section 2(10)(c)(ii) of this act are eligible for the exemption under this section only if the tribal retailer has met the requirements of section 2(3)(b) of this act.

NEW SECTION. Sec. 5. A new section is added to chapter 82.12 RCW to read as follows:

The provisions of this chapter shall not apply in respect to the use of cigarettes sold by an Indian tribe or tribal retailer during the effective period of a cooperative agreement under section 2 of this act entered into between the state and the Indian tribe or the tribal retailer. Cigarettes sold by a tribal retailer as defined in section 2(10)(c)(ii) of this act are eligible for the exemption under this section only if the tribal retailer has met the requirements of section 2(3)(b) of this act.

NEW SECTION. Sec. 6. A new section is added to chapter 82.24 RCW to read as follows:

This chapter does not apply to the sale, use, consumption, handling, possession, or distribution of cigarettes by an Indian tribe or a tribal retailer during the effective period of a cooperative agreement under section 2 of this act entered into between the state and the Indian tribe or the tribal retailer. Cigarettes sold by a tribal retailer as defined in section 2(10)(c)(ii) of this act are eligible for the exemption under this section only if the tribal retailer has met the requirements of section 2(3)(b) of this act.