HOUSE BILL NO. 786

View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact

Text to be added within a bill has been marked with Bold and Underline. Text to be removed has been marked with Strikethrough and Italic. How these codes are actually displayed will vary based on the browser software you are using.
This sentence is marked with bold and underline to show added text.
This sentence is marked with strikethrough and italic, indicating text to be removed.

Bill Status



H0786...............................................by REVENUE AND TAXATION
MOIST SNUFF - TAX - Adds to, repeals and amends existing law to define
"moist snuff"; to provide the rate of taxation for tobacco products other
than moist snuff; to provide that moist snuff shall be taxed at the rate of
one dollar per ounce; to provide for distribution of revenues; and to
provide for an alternative tax on and after January 1, 2010, on moist
snuff, if certain circumstances occur.
                                                                        
03/07    House intro - 1st rdg - to printing
03/08    Rpt prt - to Rev/Tax

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 786
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO  THE  TAXATION  OF  CERTAIN  TOBACCO  PRODUCTS;  AMENDING  SECTION
  3        63-2551,  IDAHO CODE, TO DEFINE "MOIST SNUFF" AND TO MAKE A TECHNICAL COR-
  4        RECTION; AMENDING SECTION 63-2552, IDAHO CODE, TO PROVIDE THE RATE OF TAX-
  5        ATION FOR TOBACCO PRODUCTS OTHER THAN MOIST SNUFF, TO PROVIDE FOR  DISTRI-
  6        BUTION  OF  REVENUES  AND TO MAKE TECHNICAL CORRECTIONS; REPEALING SECTION
  7        63-2552A, IDAHO CODE, RELATING TO AN ADDITIONAL  TAX  IMPOSED  ON  TOBACCO
  8        PRODUCTS  AND REPEALING SECTION 63-2564, IDAHO CODE, RELATING TO DISTRIBU-
  9        TION OF TAX REVENUES FROM THE TOBACCO PRODUCTS TAX; AMENDING  CHAPTER  25,
 10        TITLE  63,  IDAHO  CODE,  BY THE ADDITION OF A NEW SECTION 63-2552A, IDAHO
 11        CODE, TO PROVIDE THAT MOIST SNUFF SHALL BE TAXED AT THE RATE OF ONE DOLLAR
 12        PER OUNCE OF MOIST SNUFF AND TO PROVIDE FOR DISTRIBUTION OF  TAX  REVENUES
 13        ON MOIST SNUFF; AMENDING CHAPTER 25, TITLE 63, IDAHO CODE, BY THE ADDITION
 14        OF  A  NEW  SECTION  63-2552B, IDAHO CODE, TO PROVIDE UPON CERTAIN CIRCUM-
 15        STANCES OCCURRING DURING THE FISCAL YEAR ENDING JUNE 30, 2009, THE TAX  TO
 16        BE IMPOSED AND COLLECTED COMMENCING JANUARY 1, 2010, ON THE WHOLESALE SALE
 17        OF MOIST SNUFF SHALL BE IMPOSED AND COLLECTED AT THE RATE OF FORTY PERCENT
 18        OF  THE  WHOLESALE PRICE OF MOIST SNUFF AND TO PROVIDE PROCEDURES AND DIS-
 19        TRIBUTION OF REVENUES.
                                                                        
 20    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 21        SECTION 1.  That Section 63-2551, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:
                                                                        
 23        63-2551.  TOBACCO PRODUCTS TAX -- DEFINITIONS. As used in this act:
 24        (1)  "Tobacco  products" shall mean any cigars, cheroots, stogies, smoking
 25    tobacco (including granulated, plug, cut, crimp  cut,  ready  rubbed  and  any
 26    other kinds and forms of tobacco suitable for smoking in a pipe or cigarette),
 27    chewing  tobacco  (including cavendish, twist, plug, scrap and any other kinds
 28    and forms of tobacco suitable for chewing) and snuff,  however  prepared;  and
 29    shall include any other articles or products made of tobacco or any substitute
 30    therefor, except cigarettes;
 31        (2)  "Moist  snuff"  means  any  finely  cut,  ground, or powdered tobacco
 32    intended to be placed in the oral cavity, but not including dry snuff.
 33        (3)  "Manufacturer" means a person  who  manufactures  and  sells  tobacco
 34    products;
 35        (34)  "Distributor" means: (a) any person engaged in the business of sell-
 36    ing  tobacco  products in this state who brings, or causes to be brought, into
 37    this state from without the state any tobacco products for sale, (b) any  per-
 38    son  who makes, manufactures, or fabricates tobacco products in this state for
 39    sale in this state, (c) any person engaged in the business of selling  tobacco
 40    products  without  this  state  who  ships  or  transports tobacco products to
 41    retailers in this state, to be sold by those retailers;
 42        (45)  "Subjobber" means any person, other than a manufacturer or distribu-
 43    tor, who buys tobacco products from a distributor and sells  them  to  persons
                                                                        
                                           2
                                                                        
  1    other than the ultimate consumers;
  2        (56)  "Retailer"  means  any  person  engaged  in  the business of selling
  3    tobacco products to ultimate consumers;
  4        (67)  "Sale" means any transfer, exchange, or barter, in any manner or  by
  5    any  means  whatsoever,  for a consideration, and includes and means all sales
  6    made by any person. It includes a gift by a person engaged in the business  of
  7    selling  tobacco  products,  for advertising, as a means of evading the provi-
  8    sions of this chapter, or for any other purposes whatsoever;
  9        (78)  "Wholesale sales price" means the established price for which a man-
 10    ufacturer sells a tobacco product to a distributor, exclusive of any  discount
 11    or other reduction;
 12        (89)  "Business"  means  any  trade,  occupation,  activity, or enterprise
 13    engaged in for the purpose of selling or distributing tobacco products in this
 14    state;
 15        (910) "Place of business" means any place where tobacco products are manu-
 16    factured, stored, or kept for the purpose of sale  or  consumption,  including
 17    any vessel, vehicle, airplane, train, or vending machine;
 18        (101) "Retail  outlet"  means  each  place  of business from which tobacco
 19    products are sold to consumers;
 20        (112) "Commission" means the Idaho state tax commission.
                                                                        
 21        SECTION 2.  That Section 63-2552, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:
                                                                        
 23        63-2552.  TOBACCO PRODUCTS TAX IMPOSED -- RATE. (1) From and after July 1,
 24    1972  2006,  there is levied and there shall be collected a tax upon the sale,
 25    use, consumption, handling, or distribution of all  tobacco  products,  except
 26    moist  snuff,  in this state at the rate of thirty-five per cent forty percent
 27    (3540%) of the wholesale sales price of such tobacco products.
 28        (2)  Such tax shall be imposed at the time the distributor:
 29        (a)  bBrings, or causes to be brought, into this state  from  without  the
 30        state tobacco products for sale,;
 31        (b)  mMakes,  manufactures,  or  fabricates tobacco products in this state
 32        for sale in this state,; or
 33        (c)  sShips or transports tobacco products to retailers in this state,  to
 34        be sold by those retailers.
 35        (2)  A  floor  stocks  tax  is  hereby  imposed  upon every distributor of
 36    tobacco products at the rate of thirty-five per cent (35%)  of  the  wholesale
 37    sales  price of each tobacco product in his possession or under his control on
 38    July 1, 1972.
 39        Each distributor, within twenty (20) days after July 1, 1972, shall file a
 40    report with the commission, in such form  as  the  commission  may  prescribe,
 41    showing  the  tobacco  products on hand on July 1, 1972, and the amount of tax
 42    due thereon.
 43        The tax imposed by this subdivision shall be due and payable within twenty
 44    (20) days after July 1, 1972, and thereafter shall bear interest at  the  rate
 45    of one per cent (1%) per month
 46        (3)  The  revenues  received from the tax imposed by this section  and any
 47    penalties, interest or deficiency additions, shall be distributed by  the  tax
 48    commission as follows:
 49        (a)  An  amount of money shall be distributed to the state refund account,
 50        sufficient to pay current refund claims. All  refunds  authorized  by  the
 51        commission  shall  be  paid  through  the  state refund account, and those
 52        moneys are continuously appropriated.
 53        (b)  From the balance remaining after deducting the amounts  in  paragraph
                                                                        
                                           3
                                                                        
  1        (a) of this subsection, the remaining moneys shall be remitted as follows:
  2             (i)   Eighty-seven  and one-half percent (87.5%) directly to the gen-
  3             eral fund;
  4             (ii)  Six and one-quarter percent (6.25%) shall be subject to  appro-
  5             priation  to  the public school income fund to be utilized to facili-
  6             tate and provide substance abuse programs in the public school system
  7             of which amount two hundred fifty thousand dollars  ($250,000)  shall
  8             be remitted annually to the state police to increase toxicology labo-
  9             ratory  capacity  in the bureau of forensic services for drug testing
 10             of juveniles. The moneys  remitted  to  the  state  police  shall  be
 11             reviewed annually and any money excess to the operations needs of the
 12             laboratory  for  juvenile drug testing will be returned to the public
 13             school income fund for substance abuse programs in the public  school
 14             system. The laboratory may utilize this increased toxicology capacity
 15             for  adult  drug  testing to the extent that timely testing for juve-
 16             niles is not adversely impacted.
 17             (iii) Six and one-quarter percent (6.25%) shall be subject to  appro-
 18             priation  to  the department of juvenile corrections for distribution
 19             quarterly to the counties to be utilized for county  juvenile  proba-
 20             tion services, based upon the percentage the population of the county
 21             bears to the population of the state as a whole.
                                                                        
 22        SECTION  3.  That  Sections 63-2552A and 63-2564, Idaho Code,  be, and the
 23    same are hereby repealed.
                                                                        
 24        SECTION 4.  That Chapter 25, Title 63, Idaho Code, be,  and  the  same  is
 25    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 26    ignated as Section 63-2552A, Idaho Code, and to read as follows:
                                                                        
 27        63-2552A.  TAX IMPOSED ON MOIST SNUFF -- RATE -- DISTRIBUTION OF TAX REVE-
 28    NUES. (1) From and after July 1, 2006, there is levied and there shall be col-
 29    lected a  tax upon the sale, use, consumption, handling,  or  distribution  of
 30    moist  snuff  in this state at the rate of one dollar ($1.00) per ounce, and a
 31    proportionate tax at the like rate on all fractional parts  of  an  ounce,  of
 32    moist snuff; provided however, each can or package of moist snuff containing a
 33    net  weight  of  less  than one (1) ounce of moist snuff shall be taxed at the
 34    equivalent rate of a can or package containing moist snuff  weighing  one  (1)
 35    ounce. Such tax shall be imposed at the time the distributor:
 36        (a)  Brings,  or  causes  to  be brought, into this state from without the
 37        state moist snuff for sale;
 38        (b)  Makes, manufactures, or fabricates moist snuff in this state for sale
 39        in this state; or
 40        (c)  Ships or transports moist snuff to retailers in this state to be sold
 41        by those retailers.
 42        (2)  Each distributor, within twenty (20) days after July 1,  2006,  shall
 43    file  a  report  with  the commission, in such form as the commission may pre-
 44    scribe, showing the moist snuff on hand on July 1, 2006, and the amount of tax
 45    due thereon. The tax imposed in this section shall be due and  payable  within
 46    twenty  (20)  days  after  July 1, 2006, and thereafter shall bear interest as
 47    provided in section 63-3045, Idaho Code. If  the  distributor  has  previously
 48    paid  tax  to the state of Idaho upon the moist snuff on hand on July 1, 2006,
 49    the distributor shall pay the tax due pursuant to this section, but  shall  be
 50    entitled  to credit thereon for taxes previously paid on such moist snuff pur-
 51    suant to the law in effect prior to July 1, 2006.
 52        (3)  The revenues received from  the tax collected pursuant to  this  sec-
                                                                        
                                           4
                                                                        
  1    tion  and any deficiency additions, shall be distributed by the state tax com-
  2    mission as follows:
  3        (a)  An amount of money shall be distributed to the state refund  account,
  4        sufficient  to  pay  current  refund claims. All refunds authorized by the
  5        commission shall be paid through  the  state  refund  account,  and  those
  6        moneys are continuously appropriated.
  7        (b)  The  sum  of eight hundred fifty thousand dollars ($850,000) shall be
  8        subject to appropriation by the legislature  to  the  drug  court,  mental
  9        health  court  and family court services fund created in the office of the
 10        state treasurer pursuant to section 1-1625, Idaho Code, to be utilized  by
 11        the supreme court as set forth in that section.
 12        (c)  From  the balance remaining after deducting the amounts in paragraphs
 13        (a) and (b) of this subsection, the remaining moneys shall be remitted  as
 14        follows:
 15             (i)  Eighty-seven  and  one-half percent (87.5%) directly to the gen-
 16             eral fund;
 17             (ii)  Six and one-quarter percent (6.25%) shall be subject to  appro-
 18             priation  to  the public school income fund to be utilized to facili-
 19             tate and provide substance abuse programs in the public school system
 20             of which amount two hundred fifty thousand dollars  ($250,000)  shall
 21             be remitted annually to the state police to increase toxicology labo-
 22             ratory  capacity  in the bureau of forensic services for drug testing
 23             of juveniles. The moneys  remitted  to  the  state  police  shall  be
 24             reviewed annually and any money excess to the operations needs of the
 25             laboratory  for  juvenile drug testing will be returned to the public
 26             school income fund for substance abuse programs in the public  school
 27             system. The laboratory may utilize this increased toxicology capacity
 28             for  adult  drug  testing to the extent that timely testing for juve-
 29             niles is not adversely impacted.
 30             (iii) Six and one-quarter percent (6.25%) shall be subject to  appro-
 31             priation  to  the department of juvenile corrections for distribution
 32             quarterly to the counties to be utilized for county  juvenile  proba-
 33             tion services, based upon the percentage the population of the county
 34             bears to the population of the state as a whole.
                                                                        
 35        SECTION  5.  That  Chapter  25,  Title 63, Idaho Code, be, and the same is
 36    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 37    ignated as Section 63-2552B, Idaho Code, and to read as follows:
                                                                        
 38        63-2552B.  TAX  IMPOSED  ON  MOIST  SNUFF  -- RATE -- BASED ON FINDINGS OF
 39    STATE TAX COMMISSION. The state tax commission shall on or before September 1,
 40    2009, determine the state receipts together with deficiency  additions,  minus
 41    refunds,  from  the  tax  imposed on moist snuff pursuant to section 63-2552A,
 42    Idaho Code, during the state fiscal year ending June 30, 2009, and shall  cer-
 43    tify  said amount to the state board of examiners. In the event that the state
 44    receipts, together with deficiency additions, certified by the  commission  to
 45    the state board of examiners, is less than seven million dollars ($7,000,000),
 46    and  the  state  board  of examiners approves said certification, then, and in
 47    that event, commencing January 1, 2010, the tax  levied  and  collected  under
 48    section  63-2552A,  Idaho Code, shall  not be levied or collected and, instead
 49    there shall be levied and there shall be collected a tax upon the  sale,  use,
 50    consumption, handling or distribution of moist snuff in this state at the rate
 51    of  forty  percent (40%) of the wholesale sales price of moist snuff. Such tax
 52    shall be imposed at the time the distributor:  (1)  brings  or  causes  to  be
 53    brought  into  this  state  from  without  the state moist snuff for sale; (2)
                                                                        
                                           5
                                                                        
  1    makes, manufactures or fabricates moist snuff in this state for sale  in  this
  2    state; or (3) ships or transports moist snuff to retailers in this state to be
  3    sold  by  those  retailers. The revenues received from the tax imposed by this
  4    section and any deficiency additions, shall be distributed by  the  state  tax
  5    commission as provided in section 63-2552A, Idaho Code.

Statement of Purpose / Fiscal Impact


                        STATEMENT OF PURPOSE

                              RS 16198

The purpose of this legislation is two-fold: 

First: To provide a dedicated revenue source for urgently needed
additional funding for drug, family and mental health courts
throughout Idaho, subject to appropriation, such funds to be expended
under the jurisdiction of the Supreme Court. 

Second: To obtain necessary revenues by adopting uniform tax
treatment on the moist snuff category of tobacco products. This
results from basing the tax on product quantity, not the price of the
product at the wholesale level. This revision will maintain the tax
on premium moist snuff at its current level of $1.00 per ounce on the
most expensive products, but apply the same tax rate to all other
moist snuff, regardless of the wholesale price of the product. 

If the change in tax methodology does not produce revenues in
excess of $7 million dollars, or more, in Fiscal Year 2009, the tax
rate will revert to 40% of the wholesale price, effective January 1,
2010. The bill provides the procedure for making that financial
determination by the State Tax Commission, with the approval of the
State Board of Examiners.



                            FISCAL NOTE

This legislation will not impact the state general fund or
funding of other programs.

It is estimated that the change in tax methodology will result
in a minimum of $850,000 in increased tax revenue, over currently
anticipated revenue, from the moist snuff tobacco product category.
By this legislation, up to $850,000 of the increased revenue will be
subject to appropriation to the drug court, mental health court and
family court services fund to be utilized by the Supreme Court for
such purposes pursuant to section 1-1625, Idaho Code. Remaining
revenues will continue to be dedicated as currently provided by law
to benefit public school substance abuse programs and county juvenile
probation services. If revenues do not meet anticipated levels, the
tax will, on January 1, 2010, revert to the previous method of
taxation.




CONTACT

Name:  Rep. Debbie Field
Phone: (208) 332-1000


STATEMENT OF PURPOSE/FISCAL NOTE                             H 786