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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
]]]] 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
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