NCPA - National Center for Policy Analysis

Federal Subsidies For Cigarette Sales

January 24, 2000

Call it a case of the federal government's left hand not knowing what its right hand is doing. Although they are waging a war against tobacco products, Washington bureaucrats are also busy handling out subsidies to American Indian tribes to build so-called "smoke shops" that sell discounted cigarettes, according to the Senate Small Business Committee in a report to be released today.

  • Four tribes have received $4.2 million from the Department of Housing and Urban Development since 1997 to build six stores.
  • Five of the shops are in Oklahoma and the sixth is in Verdi, Nevada.
  • In addition to the construction grants, the tribes use their tax-free status to offer lower cigarette prices.
  • Tribal stores are covered by federal rules that bar tobacco sales to minors and require store clerks to check the photo identification of persons appearing to be 27 years or younger.

Those and other rules, however, are on appeal to the Supreme Court.

Source: Wendy Koch, "Federal Funding of Tribes' 'Smoke Shops' Alarms Critics," USA Today, January 24, 2000.


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