Tribe looking to overhaul Tax Code

by Jul 14, 2015NEWS ka-no-he-da0 comments





An ordinance, submitted by Principal Chief Michell Hicks, would overhaul the Tax Code of the Eastern Band of Cherokee Indians if passed.  Ordinance No. 556 (2015) would replace Chapter 105 of the Cherokee Code with a new “reformed and expanded” Cherokee Tax Code.

“The intent behind the Tax Code is mainly from a business and economic development perspective,” said Cory Blankenship, EBCI Office of Budget & Finance director.  “There is a lot of gray area when it comes to taxation and where the state has the authority to tax versus where the Tribe has the authority to tax.”

“In the Tax Code, there are no proposed taxes on individual tribal members,” Blankenship explained.  “There are no proposed property taxes, income taxes, or anything that should impact an individual tribal member negatively.  If that tribal member owns a business, then the taxes associated with running that business could change.”

Ord. No. 556 was tabled during the regular Budget Council session on Tuesday, July 7.  It was decided that a work session would be held on the legislation, but it has not been scheduled as of press time.

According to information provided by the EBCI Office of Budget & Finance, some of the new taxes that will be added include:

  • Ad Valorem Tax for non-members who place or reside a recreation vehicle, camper trailer or mobile home requiring those persons to register the property with the Tribe and pay Ad Valorem Tax based on the assessed value of the property to EBCI. This is a new tax that replaces a tax currently assessed by North Carolina counties on tribal lands.
  • Telecommunications Services Tax on the gross proceeds of producing, providing or furnishing telecommunications services to consumers on tribal lands. This is a tax on providers, not consumers.
  • Utilities Tax of 6 percent of gross receipts for those in the business of producing, providing, or furnishing utility services including electricity, gas, or water. This is a tax on providers, not consumers.
  • Advertising Tax of 6 percent of gross receipts for those advertising on tribal lands by billboards, direct mail, radio, television, and any other means.
  • Parking, Garaging and Storing tax of 6 percent of gross receipts from the business of parking, garaging or storing automobiles on tribal lands for a period of less than seven days.
  • Business Tangible Personal Property Tax, sometimes known as a Fixtures Tax, on all personal property used in business on tribal lands including such things as furniture, fixtures, tools and machinery, computers, signs, farm equipment, etc. This is a new tax that replaces one currently assessed by North Carolina counties.

The current code only has levy, privilege, and lease taxes.  The new one would establish a Cherokee Tax Commission to oversee taxes for the Tribe as well as adding several new taxes for non-EBCI persons and businesses operating on EBCI tribal lands.  The Tax Commission would be comprised of three commissioners including at least two EBCI tribal members who live on tribal land.  Each commissioner would serve two-year staggered terms, although, in the beginning, one commissioner would serve a two-year term and the other two would serve one-year terms to create the staggered system.

“Our position has been that our Tribe is providing all of the governmental services for businesses on the Reservation; however, because some of those businesses are owned by non-Indians, the state can still reach in and tax those businesses,” said Blankenship.

There is currently legislation before the North Carolina General Assembly (House Bill 912) that, if passed, would help to clear up some of the gray areas.  “The State recognizes the exclusive authority of the Eastern Band of Cherokee Indians to levy taxes within its jurisdiction, comprised of the Qualla Boundary and any other land held in trust by the United States for the benefit of the Eastern Band of Cherokee Indians,” the bill states.

The bill was introduced on April 16 and passed its First Reading and was referred to the Committee on Finance on April 20.

“Our position is that we do not need the State’s permission to tax,” said Blankenship.  “It is within our sovereign authority to do that.”

He said, however, that there is a chance for dual taxation.  “The Tribe taxing does not necessarily circumvent state taxation so you have an opportunity where a business could be charged a state tax and a tribal tax, and that makes it less appealing for businesses to actually locate on the Boundary.”

Blankenship did say that the Tribe is currently taking a hands-off approach on state income tax.  “The state still has the authority to access an income tax on non-Indians on the Boundary…the Tribe is not interested in being involved in that income tax business at this point.”

He stressed the need for the Tribe to adopt a comprehensive Tax Code “because it will let businesses know exactly what they can expect.”

Blankenship said the Tax Code outlined in Ord. No. 556 “is not an attempt to raise revenues” for the Tribe.

“There is a concern in the community that this is an attempt at revenue diversification, and it’s not.  The tax revenues that we expect to receive from this operation are fairly minimal.  There is about $100,000 each year that is flowing out to counties that should be flowing into the Tribe, and we expect to realize those revenues, but it is really just leveling the playing field for more business and commerce-type activities to occur on the Boundary.”