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S.B. 40

             1     

CIGARETTE AND TOBACCO TAX

             2     
AMENDMENTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Allen M. Christensen

             6     
House Sponsor: ____________

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill addresses the taxes on cigarettes and tobacco products.
             11      Highlighted Provisions:
             12          This bill:
             13          .    increases the tax on cigarettes, moist snuff, and other tobacco products;
             14          .    addresses the deposit of revenues collected from the taxes;
             15          .    deposits income from the permanent state trust fund into the General Fund; and
             16          .    makes technical and conforming changes.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          This bill takes effect on July 1, 2010.
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          59-14-204, as last amended by Laws of Utah 2008, Chapter 382
             24          59-14-206, as last amended by Laws of Utah 1997, Chapter 330
             25          59-14-302, as last amended by Laws of Utah 2008, Chapter 204
             26      ENACTS:
             27          59-14-701, Utah Code Annotated 1953


             28          59-14-702, Utah Code Annotated 1953
             29          59-14-703, Utah Code Annotated 1953
             30     
             31      Be it enacted by the Legislature of the state of Utah:
             32          Section 1. Section 59-14-204 is amended to read:
             33           59-14-204. Tax basis -- Rate -- Future increase -- Restricted account -- Use of
             34      revenues.
             35          (1) Except for cigarettes described under Subsection 59-14-210 (3), there is levied a tax
             36      upon the sale, use, storage, or distribution of cigarettes in the state.
             37          (2) The rates of the tax levied under Subsection (1) are:
             38          (a) [3.475] 10 cents on each cigarette, for all cigarettes weighing not more than three
             39      pounds per thousand cigarettes; and
             40          (b) [4.075] 11.725 cents on each cigarette, for all cigarettes weighing in excess of three
             41      pounds per thousand cigarettes.
             42          (3) Except as otherwise provided under this chapter, the tax levied under Subsection
             43      (1) shall be paid by any person who is the manufacturer, jobber, importer, distributor,
             44      wholesaler, retailer, user, or consumer.
             45          (4) The tax rates specified in this section shall be increased by the commission by the
             46      same amount as any future reduction in the federal excise tax on cigarettes.
             47          (5) (a) There is created within the General Fund a restricted account known as the
             48      "Cigarette Tax Restricted Account."
             49          (b) Beginning on July 1, 1998, $250,000 of the revenues generated by the increase in
             50      the cigarette tax under this section enacted during the 1997 Annual General Session shall be
             51      annually deposited into the account.
             52          (c) The Department of Health shall expend the funds deposited in the account under
             53      Subsection (5)(b) for a tobacco prevention and control media campaign targeted towards
             54      children.
             55          (d) The following revenue generated from the tax increase imposed under Subsection
             56      (1) during the 2002 General Session shall be deposited in the Cigarette Tax Restricted
             57      Account:
             58          (i) 22% of the revenue to be annually appropriated to the Department of Health for


             59      tobacco prevention, reduction, cessation, and control programs;
             60          (ii) 15% of the revenue to be annually appropriated to the University of Utah Health
             61      Sciences Center for the Huntsman Cancer Institute for cancer research; and
             62          (iii) 21% of the revenue to be annually appropriated to the University of Utah Health
             63      Sciences Center for medical education at the University of Utah School of Medicine.
             64          (e) Any balance remaining in the Cigarette Tax Restricted Account at the end of the
             65      fiscal year shall be appropriated during the next fiscal year for the purposes set forth in
             66      Subsections (5)(d)(i) through (5)(d)(iii) in proportion to the amount of revenue deposited into
             67      the account for each purpose.
             68          (f) The Legislature shall give particular consideration to appropriating any revenues
             69      resulting from the change in tax rates under Subsection (2) adopted during the 2002 Annual
             70      General Session and not otherwise appropriated pursuant to Subsection (5)(d) to enhance
             71      Medicaid provider reimbursement rates and medical coverage for the uninsured.
             72          (g) Any program or entity that receives funding under Subsection (5)(d) shall provide
             73      an annual report to the Health and Human Services Interim Committee no later that September
             74      1 of each year. The report shall include:
             75          (i) the amount funded;
             76          (ii) the amount expended;
             77          (iii) a description of the effectiveness of the program; and
             78          (iv) if the program is a tobacco cessation program, the report required in Section
             79      51-9-203 .
             80          Section 2. Section 59-14-206 is amended to read:
             81           59-14-206. Sales of stamps -- Deposit of revenues -- Redemption of unused stamps
             82      -- Discount on lump purchases of stamps -- Unlawful acts.
             83          (1) The commission may prepare stamps for use on packages and containers of
             84      cigarettes according to its specifications, designs, and denominations and shall keep an
             85      accurate record of all stamps for which the commission is responsible. The cost of the stamps
             86      shall be charged to any appropriation made to defray the costs of administering this chapter.
             87          (2) (a) The commission shall sell stamps only to persons holding licenses issued as
             88      provided in this chapter.
             89          [(a) The money received from the sale of the stamps, and all other money received


             90      from penalties, fees, and taxes provided by this chapter shall be deposited in the General Fund.]
             91          (b) The commission may deliver stamps in face value not to exceed 90% of the penal
             92      sum of the licensee's bond to any licensee without payment. The licensee shall pay for stamps
             93      within 60 days of the date the stamps were delivered on credit to the licensee.
             94          (c) Unused stamps may be redeemed within three years of their purchase by
             95      presentation to the commission of a claim by the person to whom they were originally sold.
             96      The redemption claim shall be accompanied by the unused stamps.
             97          (d) The commission shall certify a redemption claim with its approval to the state
             98      auditor, who shall draw a warrant upon the state treasurer for the payment of the claim.
             99          (3) The commission shall allow a discount of 4% upon the entire amount to each
             100      licensee for each single purchase of stamps amounting to $25 or more.
             101          (4) It is unlawful for any person to sell or dispose of stamps to any other person.
             102      However, stamps may be distributed to the various places of sale by the main office whenever a
             103      person owns or operates more than one place of sale. Each place of sale shall have a separate
             104      license and cancellation stamp.
             105          Section 3. Section 59-14-302 is amended to read:
             106           59-14-302. Tax basis -- Rates.
             107          (1) As used in this section:
             108          (a) "Manufacturer's sales price" means the amount the manufacturer of a tobacco
             109      product charges after subtracting a discount.
             110          (b) "Manufacturer's sales price" includes an original Utah destination freight charge,
             111      regardless of:
             112          (i) whether the tobacco product is shipped f.o.b. origin or f.o.b. destination; or
             113          (ii) who pays the original Utah destination freight charge.
             114          (2) There is levied a tax upon the sale, use, or storage of tobacco products in the state.
             115          (3) The tax levied under Subsection (2) shall be paid by the manufacturer, jobber,
             116      distributor, wholesaler, retailer, user, or consumer.
             117          (4) The rate of the tax under this section is:
             118          (a) for tobacco products except for moist snuff, [35%] 88% of the manufacturer's sales
             119      price; or
             120          (b) subject to Subsection (5), for moist snuff, [$.75] $2.15 per ounce.


             121          (5) (a) The tax under this section on moist snuff shall be imposed on the basis of the
             122      net weight of the moist snuff as listed by the manufacturer.
             123          (b) If the net weight of moist snuff is in a quantity that is a fractional part of one ounce,
             124      a proportionate amount of the tax described in Subsection (4)(b) is imposed:
             125          (i) on that fractional part of one ounce; and
             126          (ii) in accordance with rules made by the commission in accordance with Title 63G,
             127      Chapter 3, Utah Administrative Rulemaking Act.
             128          Section 4. Section 59-14-701 is enacted to read:
             129     
Part 7. Disposition of Cigarette and Tobacco Products Tax Revenues

             130          59-14-701. Disposition of Cigarette and Tobacco Products Tax Revenues Act.
             131          This part is known as the "Disposition of Cigarette and Tobacco Products Tax
             132      Revenues Act."
             133          Section 5. Section 59-14-702 is enacted to read:
             134          59-14-702. Disposition of revenues.
             135          Except as provided in this chapter, revenues collected under this chapter and amounts
             136      received as a penalty, interest, or a fee under this chapter shall be deposited into the General
             137      Fund.
             138          Section 6. Section 59-14-703 is enacted to read:
             139          59-14-703. Cigarette and tobacco products tax revenues -- Deposit to the
             140      permanent state trust fund -- Income deposited into General Fund.
             141          (1) The Division of Finance, after making the deposits required by this chapter, shall
             142      credit to the permanent state trust fund created and operated under Utah Constitution Article
             143      XXII, Section 4, revenue collected in a fiscal year from the taxes imposed under Sections
             144      59-14-204 and 59-14-302 that exceeds:
             145          (a) $50,064,000 in fiscal year 2010-11; and
             146          (b) $51,055,300 for a fiscal year beginning on or after July 1, 2011.
             147          (2) In accordance with Utah Constitution Article XXII, Section 4, income from the
             148      revenues deposited into the permanent state trust fund in accordance with this section shall be
             149      deposited into the General Fund.
             150          Section 7. Effective date.
             151          This bill takes effect on July 1, 2010.






Legislative Review Note
    as of 1-11-10 10:06 AM


Office of Legislative Research and General Counsel


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