The economic base of Frank's Landing, Wash., built on a fragile foundation of cigarettes, is about to collapse.
Like thousands of Indians around the country, the 70 Nisquallis there sell cigarettes to make ends meet.
But the Indian cigarette business, it now seems certain, will soon be gone, the victim of a Supreme Court decision last week to plug a tax loophole permitting Indians to sell cigarettes below market price. Without that price advantage to attract non-Indian customers, the Indians expect to lose almost all of their business.
The result is likely to be lost jobs and lost tribal income for Indian communities where unemployment already runs as high as 80 percent.
"There will be very deep hurt as a result of this," says Ronald Andrade, executive director of the National Congress of American Indians.
The court ruled that states have the right to tax sales to non-Indians, despite federal laws giving the tribes substantial autonomy within the boundaries of their reservations. The Washington tribes that lost the case, Washington vs. Confederated Tribes of the Colville Indian Reservation, may petition for a rehearing, but such requests are rarely granted.
Andrade predicts that as many as 500 jobs -- and scores of tribal programs -- will be lost in Washington alone, which has about 100 smoke shops, according to a state estimate.
Although some smoke shops income goes to individual Indian entrepreneurs, the tribes profit by operating their own shops and taxing private ones. The smaller Indian communities, already the most economically depressed, will be hardest hit because they rely so heavily on the smoke shop sales to fund tribal programs, Indians supporters say.
The Nisquallis of Frank's Landing, for example, now preparing to shut down their smoke shop, have no other significant source of income.Without the $40,000 that the business brings in each year, they expect to fall a step back down the economic ladder.
"We've come out of shacks into trailer houses," says Bill Franks, whose father in 1916 bought the six acres where the community is located. "We might have to go back into the shacks again."
Washington Attorney General Slade Gorton, who has fought for years to end the Indian tax exemption, says the impact of the ruling will not be "nearly as significant" as Indian leaders assert.
"The real beneficiaries of these sales were not Indians, but the non-Indians who managed to avoid the tax that other people pay."
Gorton, who called the Indians' smoke shop revenue "parasitical," says the exemption cost the state $14 million to $15 million last year alone.
"This is a dollar-and-cents issue in the state of Washington," says Wyman Babby, a regional official of the Interior Department's Bureau of Indian Affairs, which supported the tribe's position. "The operation of these smoke shops has been a source of great unhappiness in the state politically."
Gorton, a Republican challenging incumbent Democrat Warren Magnusons for a U.S. Senate seat, denies any suggestion that he has pressed the case against the Indians for political reasons.
He expects the state to use the new revenue for general funds, rather than tax cuts.
In the long run, Gorton says, the decision will be "good for the tribes. This kind of artificial tax exemption distorted their economy. It'll broaden their horizons and require greater business effectiveness."
But for now, the decision has rekindled smoldering Indian resentment and bitterness.
Andrade said he expects some Washington tribes to defy the court order, leading to a confrontation with the state that has "a good potential for causing some kind of violence."
Others, such as Bill Frank, view the decision as just one more example of white persecution of the Indian. "This is the way the United States government works," he said. "They're trying to push us back into the ground." g