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S.B. 259

             1     

AMENDMENTS TO TOBACCO TAX

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Allen M. Christensen

             5     
House Sponsor: Paul Ray

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions of the Cigarette and Tobacco Tax Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    removes a provision relating to the allocation of funds that remain in the Cigarette
             13      Tax Restricted Account at the end of the fiscal year; and
             14          .    makes technical changes.
             15      Monies Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          This bill takes effect on July 1, 2010.
             19          This bill coordinates with H.B. 196, Tobacco Tax Revisions, by providing substantive
             20      amendments.
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          59-14-204, as last amended by Laws of Utah 2008, Chapter 382
             24      Utah Code Sections Affected by Coordination Clause:
             25          59-14-204, as last amended by Laws of Utah 2008, Chapter 382
             26          59-14-215, Utah Code Annotated 1953
             27          59-14-302, as last amended by Laws of Utah 2008, Chapter 204


             28          59-14-304, Utah Code Annotated 1953
             29          63J-1-201, as last amended by Laws of Utah 2009, Chapters 183 and 368
             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 cents on each cigarette, for all cigarettes weighing not more than three
             39      pounds per thousand cigarettes; and
             40          (b) 4.075 cents on each cigarette, for all cigarettes weighing in excess of three pounds
             41      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)] (e) The Legislature shall give particular consideration to appropriating any
             69      revenues resulting from the change in tax rates under Subsection (2) adopted during the 2002
             70      Annual General Session and not otherwise appropriated pursuant to Subsection (5)(d) to
             71      enhance Medicaid provider reimbursement rates and medical coverage for the uninsured.
             72          [(g)] (f) Any program or entity that receives funding under Subsection (5)(d) shall
             73      provide an annual report to the Health and Human Services Interim Committee no later that
             74      September 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. Effective date.
             81          This bill takes effect on July 1, 2010.
             82          Section 3. Coordinating S.B. 259 with H.B. 196 -- Substantive amendments.
             83          If this S.B. 259 and H.B. 196, Tobacco Tax Revisions, both pass, it is the intent of the
             84      Legislature that:
             85          (1) Section 59-14-204 shall be amended to read as follows:
             86          " 59-14-204. Tax basis -- Rate -- Future increase -- Restricted account -- Use of
             87      revenues.
             88          (1) Except for cigarettes described under Subsection 59-14-210 (3), there is levied a tax
             89      upon the sale, use, storage, or distribution of cigarettes in the state.


             90          (2) The rates of the tax levied under Subsection (1) are, beginning on July 1, 2010:
             91          (a) [3.475] 8.5 cents on each cigarette, for all cigarettes weighing not more than three
             92      pounds per thousand cigarettes; and
             93          (b) [4.075] 9.963 cents on each cigarette, for all cigarettes weighing in excess of three
             94      pounds per thousand cigarettes.
             95          (3) Except as otherwise provided under this chapter, the tax levied under Subsection
             96      (1) shall be paid by any person who is the manufacturer, jobber, importer, distributor,
             97      wholesaler, retailer, user, or consumer.
             98          (4) The tax rates specified in this section shall be increased by the commission by the
             99      same amount as any future reduction in the federal excise tax on cigarettes.
             100          (5) (a) There is created within the General Fund a restricted account known as the
             101      "Cigarette Tax Restricted Account."
             102          (b) Beginning on July 1, 1998, $250,000 of the revenues generated by the increase in
             103      the cigarette tax under this section enacted during the 1997 Annual General Session shall be
             104      annually deposited into the account.
             105          (c) The Department of Health shall expend the funds deposited in the account under
             106      Subsection (5)(b) for a tobacco prevention and control media campaign targeted towards
             107      children.
             108          (d) The following revenue generated from the tax increase imposed under Subsection
             109      (1) during the 2002 General Session shall be deposited in the Cigarette Tax Restricted
             110      Account:
             111          (i) 22% of the revenue to be annually appropriated to the Department of Health for
             112      tobacco prevention, reduction, cessation, and control programs;
             113          (ii) 15% of the revenue to be annually appropriated to the University of Utah Health
             114      Sciences Center for the Huntsman Cancer Institute for cancer research; and
             115          (iii) 21% of the revenue to be annually appropriated to the University of Utah Health
             116      Sciences Center for medical education at the University of Utah School of Medicine.
             117          [(e) Any balance remaining in the Cigarette Tax Restricted Account at the end of the
             118      fiscal year shall be appropriated during the next fiscal year for the purposes set forth in
             119      Subsections (5)(d)(i) through (5)(d)(iii) in proportion to the amount of revenue deposited into
             120      the account for each purpose.]


             121          [(f)] (e) The Legislature shall give particular consideration to appropriating any
             122      revenues resulting from the change in tax rates under Subsection (2) adopted during the 2002
             123      Annual General Session and not otherwise appropriated pursuant to Subsection (5)(d) to
             124      enhance Medicaid provider reimbursement rates and medical coverage for the uninsured.
             125          [(g)] (f) Any program or entity that receives funding under Subsection (5)(d) shall
             126      provide an annual report to the Health and Human Services Interim Committee no later that
             127      September 1 of each year. The report shall include:
             128          (i) the amount funded;
             129          (ii) the amount expended;
             130          (iii) a description of the effectiveness of the program; and
             131          (iv) if the program is a tobacco cessation program, the report required in Section
             132      51-9-203 .";
             133          (2) Section 59-14-215 shall be amended to read as follows:
             134          " 59-14-215. Transitional inventory tax on cigarettes -- Penalties and interest for
             135      failure to comply -- Credit or refund for outdated, unaffixed stamps.
             136          (1) In addition to the tax described in Section 59-14-204 , there is imposed, beginning
             137      on July 1, 2010, an inventory tax on all cigarettes subject to the tax described in Section
             138      59-14-204 , upon the sale, use, storage, or distribution of those cigarettes in the state, as
             139      follows:
             140          (a) the tax imposed in this section applies only to cigarettes sold, used, stored, or
             141      distributed in the state on or after July 1, 2010:
             142          (i) that have a stamp that reflects that the tax paid on those cigarettes was paid at the
             143      tax rate imposed under Section 59-14-204 that was applicable on June 30, 2010; and
             144          (ii) for which the tax imposed in this section has not been paid; and
             145          (b) the tax imposed in this section is equal to the difference between:
             146          (i) the tax imposed on those cigarettes under Section 59-14-204 , beginning on July 1,
             147      2010; and
             148          (ii) the tax imposed on those cigarettes under Section 59-14-204 on or before June 30,
             149      2010.
             150          (2) Except as otherwise provided under this chapter, the tax imposed under this section
             151      shall be paid by any person who is the manufacturer, jobber, importer, distributor, wholesaler,


             152      or retailer.
             153          (3) A person described in Subsection (2) shall remit the tax imposed in this section, on
             154      a return prescribed by the commission, on or before July 31, 2010.
             155          (4) Failure of a person to comply with the requirements of this section subjects the
             156      person to the penalties and interest described in Sections 59-1-401 and 59-1-402 .
             157          (5) The commission may not waive the interest or penalties imposed on a person for
             158      failure to comply with the requirements of this section.
             159          (6) (a) Beginning on July 1, 2010, it is unlawful to affix a stamp to cigarettes that
             160      reflects payment of the tax imposed under Section 59-14-204 at the rate that was applicable on
             161      or before June 30, 2010.
             162          (b) A person who violates Subsection (6)(a) may be required by the commission to pay
             163      as part of the tax, and in addition to any other penalty provided in this chapter, a penalty of $25
             164      for each offense, to be assessed and collected by the commission in accordance with Chapter 1,
             165      Part 14, Assessment, Collections, and Refunds Act.
             166          (c) A person who, on or after July 1, 2010, possesses tax stamps described in
             167      Subsection (6)(a), may return the stamps to the commission for a credit or refund.";
             168          (3) Section 59-14-302 shall be amended to read as follows:
             169          " 59-14-302. Tax basis -- Rates.
             170          (1) As used in this section:
             171          (a) "Manufacturer's sales price" means the amount the manufacturer of a tobacco
             172      product charges after subtracting a discount.
             173          (b) "Manufacturer's sales price" includes an original Utah destination freight charge,
             174      regardless of:
             175          (i) whether the tobacco product is shipped f.o.b. origin or f.o.b. destination; or
             176          (ii) who pays the original Utah destination freight charge.
             177          (2) There is levied a tax upon the sale, use, or storage of tobacco products in the state.
             178          (3) The tax levied under Subsection (2) shall be paid by the manufacturer, jobber,
             179      distributor, wholesaler, retailer, user, or consumer.
             180          (4) The rate of the tax under this section is, beginning on July 1, 2010:
             181          (a) for tobacco products except for moist snuff, [35% of] .86 multiplied by the
             182      manufacturer's sales price; [or] and


             183          (b) subject to Subsection (5), for moist snuff, [$.75] $1.83 per ounce.
             184          (5) (a) The tax under this section on moist snuff shall be imposed on the basis of the
             185      net weight of the moist snuff as listed by the manufacturer.
             186          (b) If the net weight of moist snuff is in a quantity that is a fractional part of one ounce,
             187      a proportionate amount of the tax described in Subsection (4)(b) is imposed:
             188          (i) on that fractional part of one ounce; and
             189          (ii) in accordance with rules made by the commission in accordance with Title 63G,
             190      Chapter 3, Utah Administrative Rulemaking Act.";
             191          (4) Section 59-14-304 shall be amended to read as follows:
             192          " 59-14-304. Transitional inventory tax on tobacco products -- Penalties and
             193      interest for failure to comply.
             194          (1) In addition to the tax described in Section 59-14-302 , there is imposed, beginning
             195      on July 1, 2010, an inventory tax on all tobacco products subject to the tax described in Section
             196      59-14-302 , upon the sale, use, or storage of those tobacco products in the state, as follows:
             197          (a) the tax imposed in this section applies only to tobacco products sold, used, or stored
             198      in the state on or after July 1, 2010:
             199          (i) for which the tax was paid at the tax rate imposed under Section 59-14-302 that was
             200      applicable on June 30, 2010; and
             201          (ii) for which the tax imposed in this section has not been paid; and
             202          (b) the tax imposed in this section is equal to the difference between:
             203          (i) the tax imposed on those tobacco products under Section 59-14-302 , beginning on
             204      July 1, 2010; and
             205          (ii) the tax imposed on those tobacco products under Section 59-14-302 on or before
             206      June 30, 2010.
             207          (2) The tax imposed in this section shall be paid by the manufacturer, jobber,
             208      distributor, wholesaler, or retailer.
             209          (3) A person described in Subsection (2) shall remit the tax imposed in this section, in
             210      a return prescribed by the commission, on or before July 31, 2010.
             211          (4) Failure of a person to comply with the requirements of this section subjects the
             212      person to the penalties and interest described in Sections 59-1-401 and 59-1-402 .
             213          (5) The commission may not waive the interest or penalties imposed on a person for


             214      failure to comply with the requirements of this section.";
             215          (5) the amendments to Section 63J-1-201 in H.B. 196, Tobacco Tax Revisions, do not
             216      take effect;
             217          (6) the effective date of H.B. 196 is July 1, 2010; and
             218          (7) the Office of Legislative Research and General Counsel prepare the Utah Code
             219      database for publication in accordance with Subsections (1) through (6) of this coordination
             220      clause.




Legislative Review Note
    as of 3-5-10 9:03 AM


Office of Legislative Research and General Counsel


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