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H0108...............................................by REVENUE AND TAXATION CIGARETTES - Amends existing law to impose a supplemental tax on nonparticipating manufacturer cigarettes for purposes of the master tobacco settlement agreement; to state the purpose of this supplemental tax; to provide the payments of the supplemental tax by stamps; and to require that cigarette tax returns report information showing, by manufacturer and brand style, the number of cigarettes for which the supplemental tax has been paid. 02/03 House intro - 1st rdg - to printing 02/04 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature First Regular Session - 2005 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 108 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO CIGARETTE TAXES; AMENDING SECTION 63-2502, IDAHO CODE, TO DEFINE 3 THE PHRASE "NONPARTICIPATING MANUFACTURER"; AMENDING SECTION 63-2506, 4 IDAHO CODE, TO IMPOSE A SUPPLEMENTAL TAX ON NONPARTICIPATING MANUFACTURER 5 CIGARETTES AND TO STATE THE PURPOSE OF THIS SUPPLEMENTAL TAX; AMENDING 6 SECTION 63-2507, IDAHO CODE, TO PROVIDE THE PAYMENT OF THE SUPPLEMENTAL 7 TAX BY STAMPS; AND AMENDING SECTION 63-2510, IDAHO CODE, TO REQUIRE THAT 8 CIGARETTE TAX RETURNS REPORT INFORMATION SHOWING, BY MANUFACTURER AND 9 BRAND STYLE, THE NUMBER OF CIGARETTES FOR WHICH THE SUPPLEMENTAL TAX HAS 10 BEEN PAID; AND DECLARING AN EMERGENCY. 11 Be It Enacted by the Legislature of the State of Idaho: 12 SECTION 1. That Section 63-2502, Idaho Code, be, and the same is hereby 13 amended to read as follows: 14 63-2502. DEFINITIONS. For the purpose of this act, unless otherwise 15 required by the context: 16 (a) The word "wholesaler" means and includes every person who purchases, 17 sells or distributes cigarettes to other wholesalers or to retailers for the 18 purpose of resale. 19 (b) The word "retailer" means every person, other than a wholesaler, who 20 purchases, sells, offers for sale, or distributes cigarettes at retail, irre- 21 spective of quantity or amount, or the number of sales. 22 (c) The phrase "wholesale sale" means a sale of cigarettes by a whole- 23 saler to a retailer. 24 (d) The word "cigarette" shall be taken in the ordinary context of that 25 word and shall be any roll for smoking, made wholly or in part of tobacco, 26 where such roll has a wrapper or cover made of paper or any other material, 27 except where such wrapper is wholly or in the greater part made of tobacco. 28 (e) The phrase "package of cigarettes" means the individual package, box, 29 or other container in or from which retail sales of cigarettes are normally 30 made or intended to be made. A package shall contain no less than twenty (20) 31 cigarettes and be packaged in increments of five (5). 32 (f) The phrase "nonparticipating manufacturer" means a tobacco product 33 manufacturer, as defined in section 39-7802, Idaho Code, that is not a partic- 34 ipating manufacturer within the meaning of subsection II(ii) of the Master 35 Settlement Agreement as defined in section 39-7802, Idaho Code. 36 SECTION 2. That Section 63-2506, Idaho Code, be, and the same is hereby 37 amended to read as follows: 38 63-2506. IMPOSITION OF TAX. (1) From June 1, 2003, through June 30, 2005, 39 a tax upon the purchase, storage, use, consumption, handling, distribution or 40 wholesale sale of cigarettes is hereby imposed at the rate of fifty-seven 41 cents (57¢) per package of twenty (20) cigarettes, which tax shall be paid by 2 1 the wholesaler, and collected by the state tax commission. 5.1746¢ of the tax 2 collected per package of twenty (20) cigarettes shall be subject to appropria- 3 tion to the public school income fund to be utilized to facilitate and provide 4 substance abuse programs in the public school system. 5.1746¢ of the tax col- 5 lected per package of twenty (20) cigarettes shall be subject to appropriation 6 to the department of juvenile corrections for distribution to the counties to 7 be utilized for county juvenile probation services. 8 (2) On and after July 1, 2005, a tax upon the purchase, storage, use, 9 consumption, handling, distribution or wholesale sale of cigarettes is hereby 10 imposed at the rate of twenty-eight cents (28¢) per package of twenty (20) 11 cigarettes, which tax shall be paid by the wholesaler, and collected by the 12 state tax commission. Five cents (5¢) of the tax collected per package of 13 twenty (20) cigarettes shall be subject to appropriation to the public school 14 income fund to be utilized to facilitate and provide substance abuse programs 15 in the public school system. Five cents (5¢) of the tax collected per package 16 of twenty (20) cigarettes shall be subject to appropriation to the department 17 of juvenile corrections for distribution to the counties to be utilized for 18 county juvenile probation services. 19 (3) In addition to all other taxes imposed by this chapter, a supplemen- 20 tal tax upon the purchase, storage, use, consumption, handling, distribution 21 or wholesale sale of nonparticipating manufacturer cigarettes is hereby 22 imposed at the rate of fifty cents (50¢) per package of twenty (20) ciga- 23 rettes, which tax shall be paid by the wholesaler, and collected by the state 24 tax commission. The purposes of this supplemental tax are: 25 (a) To fund enforcement and administration of chapter 78, title 39, Idaho 26 Code, related nonparticipating manufacturer legislation, and this supple- 27 mental tax, including reasonable administrative costs incurred by whole- 28 salers under this supplemental tax; 29 (b) To prevent nonparticipating manufacturers from undermining the 30 state's policy of reducing underage smoking by offering their cigarettes 31 for sale substantially below the price of cigarettes of other manufac- 32 turers; and 33 (c) To fund such other purposes as the legislature shall determine. 34 (4) Appropriated funds shall be distributed quarterly to the counties 35 based upon the percentage the population of the county bears to the population 36 of the state as a whole. 37 ( 45) The remaining moneys collected and those moneys not appropriated 38 under the provisions of this section shall be distributed as specified in sec- 39 tion 63-2520, Idaho Code. 40 SECTION 3. That Section 63-2507, Idaho Code, be, and the same is hereby 41 amended to read as follows: 42 63-2507. STAMPS TO BE PRINTED -- AFFIXED TO INDIVIDUAL PACKAGES. The 43 state tax commission is hereby authorized and required to design and have 44 printed Idaho cigarette stamps which are to be affixed to each individual 45 package of cigarettes, which stamps shall be in the amount of the tax imposed 46 by section 63-2506, Idaho Code. The stamps used for cigarettes subject to the 47 supplemental tax imposed by subsection (3) of section 63-2506, Idaho Code, 48 shall be different from the stamps used for cigarettes not subject to such 49 supplemental tax, shall indicate payment of both the supplemental and the 50 other taxes imposed by section 63-2506, Idaho Code, and shall contrast in 51 color or design, or both, with the stamps used for cigarettes that are not 52 subject to the supplemental tax imposed by subsection (3) of section 63-2506, 53 Idaho Code. Except as otherwise prescribed by the state tax commission, each 3 1 stamp shall be affixed in such a manner that it cannot be removed without 2 being mutilated or destroyed. Stamps may be obtained only from the state tax 3 commission, or its authorized agent, and only by a holder of a valid and cur- 4 rent wholesaler permit. 5 SECTION 4. That Section 63-2510, Idaho Code, be, and the same is hereby 6 amended to read as follows: 7 63-2510. PAYMENT OF TAX -- RETURNS -- ACCOUNTING FOR STAMPS. (1) The cig- 8 arette taxes imposed in section 63-2506, Idaho Code, are due from the person 9 required under section 63-2508, Idaho Code, to affix stamps, and are payable 10 to the state tax commission monthly, together with the return required in this 11 section. 12 (2) Every person owing cigarette taxes and every wholesaler shall file a 13 return with the state tax commission in such form as the commission shall pre- 14 scribe. The return shall report all taxes due regarding cigarettes received 15 during the month or other reporting period, approved by the state tax commis- 16 sion, to which the return relates. The return shall report information show- 17 ing, by manufacturer and brand style, the number of cigarettes for which the 18 person or wholesaler has paid the supplemental tax imposed by subsection (3) 19 of section 63-2506, Idaho Code. The return shall contain such other informa- 20 tion as the state tax commission shall require, and shall be signed by the 21 person required to file the return or by such person's duly authorized agent. 22 The return shall be filed on or before the twentieth day of the month follow- 23 ing the end of the taxable period to which the return relates. 24 (3) The amount allowed as compensation for affixing stamps under section 25 63-2509, Idaho Code, shall be separately stated on the return as a credit 26 against taxes due on the return. 27 (4) In addition to reporting the tax due as provided in this section, the 28 return shall provide an accounting of all cigarette stamps acquired, held, and 29 affixed by the wholesaler. The return shall include: 30 (a) The number of stamps which were held at the beginning of the report- 31 ing period and were not affixed to packages; 32 (b) The number of stamps acquired during the reporting period; 33 (c) The number of stamps affixed to packages during the reporting period; 34 (d) The number of unaffixed stamps held at the end of the reporting 35 period; and 36 (e) The number, if any, of stamps lost or destroyed. If stamps are lost 37 or destroyed, a statement describing the circumstances giving rise to the 38 loss or destruction shall accompany the return. 39 (5) In the event that any stamps obtained by a wholesaler are lost, 40 destroyed, or otherwise unaccounted for, the wholesaler shall be liable for an 41 amount of tax equal to the tax on the number of cigarettes to which such 42 stamps would have been affixed, unless the wholesaler can establish, by clear 43 and convincing evidence, that a specific number of stamps were actually 44 destroyed or mutilated in such a manner as to render them unusable. 45 (6) In the event that a wholesaler or any other person in possession of 46 unused cigarette stamps shall cease doing business as a wholesaler of ciga- 47 rettes, such wholesaler or other person shall return all unused stamps to the 48 state tax commission or shall be liable for an amount of tax equal to the tax 49 on the number of cigarettes to which such stamps would have been affixed. 50 (7) A wholesaler may claim a credit against taxes due on the tax return 51 for taxes previously paid on cigarettes, which after stamps are affixed, 52 become unmarketable and are returned to the manufacturer. When such return is 53 verified in such manner as the state tax commission may, by rule provide, the 4 1 credit applies to the tax return for the month in which the verification 2 occurs; except that, any amount of credit exceeding the tax due on the tax 3 return may be carried forward to the succeeding tax return, in chronological 4 order until exhausted. 5 (8) Taxes paid on cigarettes sold on or after January 1, 2000, on 6 accounts later found to be worthless and actually charged-off may be credited 7 upon a subsequent payment of the tax on cigarettes or, if no such tax is due, 8 refunded. If all or part of such an account is thereafter collected, the tax 9 shall be paid based upon the proportion of the amount collected. 10 SECTION 5. An emergency existing therefor, which emergency is hereby 11 declared to exist, this act shall be in full force and effect on and after its 12 passage and approval.
STATEMENT OF PURPOSE RS 14683 The Non-Participating Manufacturers (NPM) Equity Fee Legislation would help protect the states' tobacco settlement payments in the future, recoup for the state some of the tobacco settlement monies that the NPMs have drained, help fund enforcement of the states' Tobacco Escrow Statutes, and protect children from under-priced NPM cigarettes. This legislation will increase the tax by $.50 per pack for those manufacturers who sell product in Idaho and are not a member of the Tobacco Master Settlement Agreement (MSA). FISCAL NOTE It is estimated the impact to the General Fund will be $1 million once the Legislation is fully implemented. Contact Name: Representative Jim Clark Phone: 332-1100 STATEMENT OF PURPOSE/FISCAL NOTE H 108