There's a new fight brewing between the Seneca Indian nation here in western New York and Governor Paterson's administration, which is proposing a new cigarette tax for Indian retailers.

BUFFALO, NY - It's been a battle for years. Once again, New York state government wants to collect cigarettes taxes from Indian nations. A new tax proposal by the Paterson administration has brought the fight to a whole new level Tuesday.

"The way I view it is, this is an act of war. And certainly if New York state wants a fight, they're going to get a fight because we're not going to back down," said J.C. Seneca, one of the leaders of Seneca Nation.

The plan would limit the number of tax-free cigarettes that could be legally sold to Indian nations and tribes in New York.

"What they're trying to do is put a stranglehold on us. They're trying to restrict our supply line. They're trying to cut off our supply lines. They're trying to bring upon us economic termination. This is economic terrorism on behalf of the state," said Seneca.

This regulation would prevent Indian nations from purchasing an unlimited amount of tax-free cigarettes. The state would collect more revenue. A spokesman for the American Cancer Society supports Paterson's tax proposal.

"If people no longer had access to these cheap, untaxed cigarettes, we know from the data that we've seen that 100,000 New Yorkers would quit smoking," said Paul McGee, a spokesman for the American Cancer Society.

The Indian nations have 45 days to officially comment to the New York State Department of Taxation and Finance. That time frame likely won't do anything to ease tensions.

"We're a sovereign nation. We're going to protect our treaties. We're going to protect our people and we'll do that at all costs and whatever is necessary. So if they're ready for that, then so be it," said Seneca.

The complete text of the proposed regulation can be found on the New York State Department of Taxation and Finance's web site.