Washington A House panel on Wednesday rejected a proposal to punish tribes that do not collect state sales taxes on gasoline and cigarettes sold by reservation businesses.
The House Resources Committee killed the plan on a 23-15 vote, also rejecting a compromise proposal from committee Chairman Don Young, R-Alaska.
The original bill would have allowed the federal government to revoke the reservation status of land used by Indian businesses which do not collect state sales taxes. Young's proposal would have allowed the federal Interior and Justice departments to collect state taxes from tribes that refuse to collect them.
Groups of truck stops, convenience stores and similar businesses have complained to Congress that Indian reservation smoke shops and gas stations which do not collect state taxes unfairly undercut their non-Indian competitors on prices. The U.S. Supreme Court has ruled that states can tax sales by reservation businesses to non-Indians.
Opponents said both measures were not necessary, saying only 22 of the 558 American Indian tribes were refusing to collect state taxes. States can either negotiate agreements with tribes to collect the taxes or collect taxes on gas and cigarettes at the wholesale level, bypassing the tribal businesses entirely.