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Study: Tribal gas station would cost jobs, revenue

January 30, 2013
By JACKIE STARK - Journal Staff Writer (jstark@miningjournal.net) , The Mining Journal

MARQUETTE - A new study commissioned by the Upper Peninsula Petroleum Association says a proposed Keweenaw Bay Indian Community gas station in Marquette Township could result in the loss of up to 63 jobs, $1.25 million in annual wages, $10.7 million in annual in-store sales and $1.7 million annually in state taxes in Marquette County.

The study, commissioned in September and conducted by a Western Michigan University professor and Ohio-based firm Keip Government Solutions, alleges a total of $39 million would be lost in taxes and wages were the KBIC allowed to operate a station it is proposing to locate on land in Marquette Township. The KBIC is requesting the U.S. Bureau of Indian Affairs place the land into trust.

If the BIA accepts the tribe's trust application, the gas station could offer gasoline and other items to consumers with no sales tax attached.

Article Photos

A KBIC gas station is proposed for this site in Marquette Township. (Journal photo by Matt Keiser)

"After discussions with selected petroleum retailers, Keip Government Solutions estimates that up to 50 direct jobs could be lost if the KBIC initiative is successful," the study states. "Similarly, gas sales could decline by over $25 million per year, wages lost could total $910,000, and lost inside sales could total $7.4 million in the Marquette area."

The study says the term "jobs lost" includes the "reduction of full-time or part-time jobs, or a reduction of working hours."

It also states motor fuels, nationally, "represent 71.4 percent of convenience store revenues."

The report claims there are 35 petroleum retailers operating in Marquette County, representing 248 direct jobs and 317 total jobs. It says a tribally owned gas station could result in the loss of up to 20 percent of other area petroleum retailers' business, though it also states some local station owners believed the loss could go as high as 30 percent.

The study cites several court cases involving the tribe and state government over tax collection, and says "The KBIC appears to have a track record of fighting Michigan taxation. Ten of 12 federally recognized Indian tribes have entered into tax agreements with the state of Michigan. Why is the KBIC unable to work with the state of Michigan on tax issues?"

"Rather than be a taxpaying member of the community and work with the state of Michigan, the KBIC has attempted (and failed) to make the case that the KBIC should not pay Michigan taxes," the report goes on to say.

Under a section of the report titled "Estimate Of Negative Impact On Marquette County From KBIC Initiative," the report claims, "Given a sales tax free operation, it is highly unlikely that any other competing businesses would open. If local Marquette gas stations go out of business due to the KBIC initiative, it is also possible that, after business closures occur, the tribe will return retail prices to the level before the tribal outlet was open for business, or perhaps even higher."

The report also outlines scenarios of other businesses the tribe could potentially open in the Marquette area, were the gas station to be built.

"The KBIC initiative is a typical 'camel-in-the-tent' scenario. KBIC tax-free goods are not restricted to gas. Consider the following list of goods and services that are either not taxed or are opportunities for additional tribal tax aversion."

The list includes "mineral extraction," a "full-service marina" and "literally any business."

To read the full report, visit www.kbictaxfree.com.

The UPPA represents 35 petroleum retailers in the U.P. who operate 90 retail stores and employ approximately 800 people.

The KBIC did not return a call for comment by press time today.

Jackie Stark can be reached at 906-228-2500, ext. 242.

 
 

 

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