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H0697...............................................by REVENUE AND TAXATION
SNUFF - TOBACCO - TAXATION - Amends, adds to and repeals existing law to
define "moist snuff"; to provide the rate of taxation for tobacco products
other than moist snuff and providing for revenues; to provide that moist
snuff shall be taxed at the rate of one dollar per ounce; and to provide
for distribution of tax revenues.
02/16 House intro - 1st rdg - to printing
02/17 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 697
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.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. That Section 63-2551, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 63-2551. TOBACCO PRODUCTS TAX -- DEFINITIONS. As used in this act:
18 (1) "Tobacco products" shall mean any cigars, cheroots, stogies, smoking
19 tobacco (including granulated, plug, cut, crimp cut, ready rubbed and any
20 other kinds and forms of tobacco suitable for smoking in a pipe or cigarette),
21 chewing tobacco (including cavendish, twist, plug, scrap and any other kinds
22 and forms of tobacco suitable for chewing) and snuff, however prepared; and
23 shall include any other articles or products made of tobacco or any substitute
24 therefor, except cigarettes;
25 (2) "Moist snuff" means any finely cut, ground, or powdered tobacco
26 intended to be placed in the oral cavity, but not including dry snuff.
27 (3) "Manufacturer" means a person who manufactures and sells tobacco
28 products;
29 (34) "Distributor" means: (a) any person engaged in the business of sell-
30 ing tobacco products in this state who brings, or causes to be brought, into
31 this state from without the state any tobacco products for sale, (b) any per-
32 son who makes, manufactures, or fabricates tobacco products in this state for
33 sale in this state, (c) any person engaged in the business of selling tobacco
34 products without this state who ships or transports tobacco products to
35 retailers in this state, to be sold by those retailers;
36 (45) "Subjobber" means any person, other than a manufacturer or distribu-
37 tor, who buys tobacco products from a distributor and sells them to persons
38 other than the ultimate consumers;
39 (56) "Retailer" means any person engaged in the business of selling
40 tobacco products to ultimate consumers;
41 (67) "Sale" means any transfer, exchange, or barter, in any manner or by
42 any means whatsoever, for a consideration, and includes and means all sales
43 made by any person. It includes a gift by a person engaged in the business of
2
1 selling tobacco products, for advertising, as a means of evading the provi-
2 sions of this chapter, or for any other purposes whatsoever;
3 (78) "Wholesale sales price" means the established price for which a man-
4 ufacturer sells a tobacco product to a distributor, exclusive of any discount
5 or other reduction;
6 (89) "Business" means any trade, occupation, activity, or enterprise
7 engaged in for the purpose of selling or distributing tobacco products in this
8 state;
9 (910) "Place of business" means any place where tobacco products are manu-
10 factured, stored, or kept for the purpose of sale or consumption, including
11 any vessel, vehicle, airplane, train, or vending machine;
12 (101) "Retail outlet" means each place of business from which tobacco
13 products are sold to consumers;
14 (112) "Commission" means the Idaho state tax commission.
15 SECTION 2. That Section 63-2552, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 63-2552. TOBACCO PRODUCTS TAX IMPOSED -- RATE. (1) From and after July 1,
18 1972 2006, there is levied and there shall be collected a tax upon the sale,
19 use, consumption, handling, or distribution of all tobacco products, except
20 moist snuff, in this state at the rate of thirty-five per cent forty percent
21 (3540%) of the wholesale sales price of such tobacco products.
22 (2) Such tax shall be imposed at the time the distributor:
23 (a) bBrings, or causes to be brought, into this state from without the
24 state tobacco products for sale,
25 (b) mMakes, manufactures, or fabricates tobacco products in this state
26 for sale in this state, or
27 (c) sShips or transports tobacco products to retailers in this state, to
28 be sold by those retailers.
29 (2) A floor stocks tax is hereby imposed upon every distributor of
30 tobacco products at the rate of thirty-five per cent (35%) of the wholesale
31 sales price of each tobacco product in his possession or under his control on
32 July 1, 1972.
33 Each distributor, within twenty (20) days after July 1, 1972, shall file a
34 report with the commission, in such form as the commission may prescribe,
35 showing the tobacco products on hand on July 1, 1972, and the amount of tax
36 due thereon.
37 The tax imposed by this subdivision shall be due and payable within twenty
38 (20) days after July 1, 1972, and thereafter shall bear interest at the rate
39 of one per cent (1%) per month
40 (3) The revenues received from the tax imposed by this section and any
41 penalties, interest or deficiency additions, shall be distributed by the tax
42 commission as follows:
43 (a) An amount of money shall be distributed to the state refund account,
44 sufficient to pay current refund claims. All refunds authorized by the
45 commission shall be paid through the state refund account, and those
46 moneys are continuously appropriated.
47 (b) From the balance remaining after deduction the amounts in paragraph
48 (a) of this subsection, the remaining moneys shall be remitted as follows:
49 (i) Eighty-seven and one-half percent (87.5%) directly to the gen-
50 eral fund;
51 (ii) Six and one-quarter percent (6.25%) shall be subject to appro-
52 priation to the public school income fund to be utilized to facili-
53 tate and provide substance abuse programs in the public school system
3
1 of which amount two hundred fifty thousand dollars ($250,000) shall
2 be remitted annually to the state police to increase toxicology lab
3 capacity in the bureau of forensic services for drug testing of juve-
4 niles. The moneys remitted to the state police shall be reviewed
5 annually and any money excess to the operations needs of the labora-
6 tory for juvenile drug testing will be returned to the public school
7 income fund for substance abuse programs in the public school system.
8 The laboratory may utilize this increased toxicology capacity for
9 adult drug testing to the extent that timely testing for juveniles is
10 not adversely impacted.
11 (iii) Six and one-quarter percent (6.25%) shall be subject to appro-
12 priation to the department of juvenile corrections for distribution
13 quarterly to the counties to be utilized for county juvenile proba-
14 tion services, based upon the percentage the population of the county
15 bears to the population of the state as a whole.
16 SECTION 3. That Sections 63-2552A, and 63-2564, Idaho Code, be, and the
17 same are hereby repealed.
18 SECTION 4. That Chapter 25, Title 63, Idaho Code, be, and the same is
19 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
20 ignated as Section 63-2552A, Idaho Code, and to read as follows:
21 63-2552A. TAX IMPOSED ON MOIST SNUFF -- RATE -- DISTRIBUTION OF TAX REVE-
22 NUES. (1) From and after July 1, 2006, there is levied and there shall be col-
23 lected a tax upon the sale, use, consumption, handling, or distribution of
24 moist snuff in this state at the rate of one dollar ($1.00) per ounce, and a
25 proportionate tax at the like rate on all fractional parts of an ounce, of
26 moist snuff; provided however, each can or package of moist snuff containing a
27 net weight of less than one (1) ounce of moist snuff shall be taxed at the
28 equivalent rate of a can or package containing moist snuff weighing one (1)
29 ounce. Such tax shall be imposed at the time the distributor:
30 (a) Brings, or causes to be brought, into this state from without the
31 state moist snuff for sale;
32 (b) Makes, manufactures, or fabricates moist snuff in this state for sale
33 in this state; or
34 (c) Ships or transports moist snuff to retailers in this state to be sold
35 by those retailers.
36 (2) Each distributor, within twenty (20) days after July 1, 2006, shall
37 file a report with the commission, in such form as the commission may pre-
38 scribe, showing the moist snuff on hand on July 1, 2006, and the amount of tax
39 due thereon. The tax imposed in this section shall be due and payable within
40 twenty (20) days after July 1, 2006, and thereafter shall bear interest as
41 provided in section 63-3045, Idaho Code. If the distributor has previously
42 paid tax to the state of Idaho upon the moist snuff on hand on July 1, 2006,
43 the distributor shall pay the tax due pursuant to this section, but shall be
44 entitled to credit thereon for taxes previously paid on such moist snuff pur-
45 suant to the law in effect prior to July 1, 2006.
46 (3) The revenues received from the tax collected pursuant to this sec-
47 tion and any deficiency additions, shall be distributed by the state tax com-
48 mission 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.
4
1 (b) The sum of eight hundred fifty thousand dollars ($850,000) shall be
2 subject to appropriation by the legislature to the drug court, mental
3 health court and family court services fund created in the office of the
4 state treasurer pursuant to section 1-1625, Idaho Code, to be utilized by
5 the supreme court as set forth in that section.
6 (c) From the balance remaining after deduction the amounts in paragraphs
7 (a) and (b) of this subsection, the remaining moneys shall be remitted as
8 follows:
9 (i) Eighty-seven and one-half percent (87.5%) directly to the gen-
10 eral fund;
11 (ii) Six and one-quarter percent (6.25%) shall be subject to appro-
12 priation to the public school income fund to be utilized to facili-
13 tate and provide substance abuse programs in the public school system
14 of which amount two hundred fifty thousand dollars ($250,000) shall
15 be remitted annually to the state police to increase toxicology lab
16 capacity in the bureau of forensic services for drug testing of juve-
17 niles. The moneys remitted to the state police shall be reviewed
18 annually and any money excess to the operations needs of the labora-
19 tory for juvenile drug testing will be returned to the public school
20 income fund for substance abuse programs in the public school system.
21 The laboratory may utilize this increased toxicology capacity for
22 adult drug testing to the extent that timely testing for juveniles is
23 not adversely impacted.
24 (iii) Six and one-quarter percent (6.25%) shall be subject to appro-
25 priation to the department of juvenile corrections for distribution
26 quarterly to the counties to be utilized for county juvenile proba-
27 tion services, based upon the percentage the population of the county
28 bears to the population of the state as a whole.
STATEMENT OF PURPOSE
RS 15759C1
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. The
state will continue to tax the product based on value through
imposition of the state's sales tax at the rate of 5% on the retail
price.
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 approximately $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.
The remaining tax revenue will continue to be dedicated, or
subject to appropriation, as follows: 87.5% directly to the general
fund; 6.25% subject to appropriation to the public school income fund
to facilitate substance abuse programs in the public school system;
and 6.25% subject to appropriation to the department of juvenile
corrections to be utilized for county juvenile probation services. No
loss of revenue to those funds will occur as a result of this
legislation.
CONTACT
Name: Rep. Debbie Field
Phone: (208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 697