Tribal-owned gas stations receive gas-tax "refunds" from state for taxes consumers pay
Contact: Lisa Shin
206-937-9691
lshin@washingtonpolicy.org
Practice is based on agreement signed by former Governor Gregoire; WPC files Amicus Brief in AUTO v. State of Washington case
SEATTLE — In 2007, Governor Christine Gregoire signed agreements with Indian tribes that allow those tribes that operate gas station businesses to be ”refunded” 75% of the state gas tax on all fuel sold on tribal lands. Prior to the agreements, the State typically refunded tribes for fuel consumed by tribal members on reservations. The tribes were key supporters of Governor Gregoire in her 2004 re-election effort.
The 2007 agreements created a special status for Indian-owned gas stations and resulted in unfair competition with businesses owned by other Washington citizens, which are typically not eligible to receive refunds for fuel sold at their businesses.
In 2011, a group of Washington businesses called the Automotive United Trades Organization (AUTO) asked the Washington Supreme Court to review a lower court decision that refused to address whether the Gregoire agreements were illegal and unfair. The Washington Supreme Court found in favor of AUTO and directed the lower court to continue with proceedings, but the lower court again rejected AUTO’s claims.
In 2012, the State Supreme Court announced that it would again review the lower court’s handling of AUTO’s case. The Court will hear the case on May 12, 2015.
As it did the first time the State Supreme Court ruled in favor of AUTO, Washington Policy Center (WPC) filed an Amicus Curiae brief in support of AUTO in the case, believing that constitutional protections for disbursement of “refunds” have been violated. The State Supreme Court agreed to receive Washington Policy Center’s brief on April, 8, 2015.
WPC is asking the court to consider the following points:
- Indian tribes cannot receive a tax “refund” because they are not the taxpayer.
A refund is typically issued by the State when a taxpayer pays too much tax, either by overpaying an applicable tax or paying a tax that does not apply to the taxpayer. Indian tribes do not pay the state gas tax and therefore cannot overpay a tax they do not pay. Payments given by the State to Indian tribes should therefore not be considered as “tax refunds.” They are simply transfers of money from the public treasury to a private Indian-owned business.
- Expenditure of public funds for policy purposes must be appropriated by the State legislature and not disguised as tax refunds.
Since state gas tax payments to private Indian tribes do not constitute a tax refund, any public money paid out of the state Motor Vehicle Account to an Indian tribe should be legally appropriated by the state legislature first, and should include a recorded vote of elected representatives.
Since state gas tax payments to private Indian tribes do not constitute a tax refund, any public money paid out of the state Motor Vehicle Account to an Indian tribe should be legally appropriated by the state legislature first, and should include a recorded vote of elected representatives.
According to former State Auditor Brian Sonntag, approximately $193 million in state gas tax revenue has been paid to Indian tribes between 2005 and 2013, with annual payments rising above $30 million. Under the agreement, Sonntag estimated an additional $340 million will be given to Indian tribes over the next decade.
WPC research found that money currently paid to the tribes is designated to be used for transportation purposes only, yet Indian tribes do not make audits publicly available to confirm how these funds are used. Our research also questioned whether public money from the state Motor Vehicle Fund may have been used to undercut gas stations owned by their competitors, in violation of the constitution and the agreements with the State. Any payments from the State to tribal leaders or Indian-owned private businesses should be appropriated by the Legislature with full transparency and accountability, because these payments are not a “refund” for overpayment of fuel taxes.
Click here to view WPC's Amicus Brief online
