Print Friendly HOUSE BILL NO. 108 – Cigarettes, supplemental tax
HOUSE BILL NO. 108
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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
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
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
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
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
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
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).
It is estimated the impact to the General Fund will be $1 million once
the Legislation is fully implemented.
Name: Representative Jim Clark
STATEMENT OF PURPOSE/FISCAL NOTE H 108