S.B. 227

1

CIGARETTE TAX
2 1997 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Scott N. Howell
5 AN ACT RELATING TO REVENUE AND TAXATION; INCREASING THE TAX RATE
6 LEVIED ON CIGARETTES; PROVIDING FOR THE DISTRIBUTION OF REVENUES
7 GENERATED BY THE CIGARETTE TAX INCREASE; CREATING A RESTRICTED
8 ACCOUNT TO BE USED BY VARIOUS STATE AGENCIES; AND PROVIDING AN
9 EFFECTIVE DATE.
10 This act affects sections of Utah Code Annotated 1953 as follows:
11 AMENDS:
12 26-36-107, as enacted by Chapter 187, Laws of Utah 1993
13 59-14-204, as last amended by Chapter 266, Laws of Utah 1991
14 Be it enacted by the Legislature of the state of Utah:
15 Section 1. Section 26-36-107 is amended to read:
16 26-36-107. Restricted account -- Creation -- Deposits.
17 (1) There is created a restricted account within the General Fund pursuant to Section
18 51-5-4 known as the "Medicaid Hospital Provider Temporary Assessment Account." Proceeds
19 from the assessment and amounts appropriated by the Legislature shall be deposited in the
20 restricted account to be used for the purposes of funding the state's hospital reimbursement share
21 of the Medicaid program that, together with federal financial participation, shall be redistributed
22 on the basis of methodology in the state Medicaid plan.
23 (2) Money shall be appropriated from the account to the department for the purposes
24 described in Subsection (1) in accordance with Title 63, Chapter 38, Budgetary Procedures Act.
25 Section 2. Section 59-14-204 is amended to read:
26 59-14-204. Tax basis -- Rate -- Future increase -- Restricted account.
27 (1) There is levied a tax upon the sale, use, or storage of cigarettes in the state.

1 (2) The rates of the tax levied under Subsection (1) are:
2 (a) [1.325] 2.575 cents on each cigarette, for all cigarettes weighing not more than three
3 pounds per thousand cigarettes; and
4 (b) [1.925] 3.175 cents on each cigarette, for all cigarettes weighing in excess of three
5 pounds per thousand cigarettes.
6 (3) The tax levied under Subsection (1) shall be paid by the manufacturer, jobber,
7 distributor, wholesaler, retailer, user, or consumer.
8 (4) The tax rates specified in this section shall be increased by the commission by the same
9 amount as any future reduction in the federal excise tax on cigarettes.
10 (5) Beginning on July 1, 1997, the revenues generated by the increase in the cigarette tax
11 under this section enacted during the 1997 Annual General Session shall be annually distributed
12 as follows:
13 (a) $8,720,000 of the revenues shall be deposited into the restricted account created in
14 Subsection (6) and distributed as follows:
15 (i) $3,488,000 shall be distributed to the Department of Health to be used for tobacco use
16 prevention and cessation programs;
17 (ii) $3,488,000 shall be distributed to the Division of Substance Abuse created in Section
18 62A-8-103 to be used for substance abuse prevention and treatment;
19 (iii) $872,000 shall be distributed to the Division of Health Care Financing created in
20 Section 26-18-2.1 for Medicaid organ transplants; and
21 (iv) $872,000 shall be distributed to the State Office of Education for the School Nursing
22 Services Incentive Program established in Section 53A-11-204;
23 (b) $4,360,000 of the revenues shall be deposited into the Comprehensive Health
24 Insurance Pool Enterprise Fund created in Section 31A-29-120 to be used as provided in Title
25 31A, Chapter 29, Comprehensive Health Insurance Pool Act;
26 (c) $6,104,000 of the revenues shall be deposited into the Medicaid Hospital Provider
27 Temporary Assessment Account created in Section 26-36-107 to be used as provided in Section
28 26-36-107; and
29 (d) $2,616,000 shall be deposited into the Wildland Fire Suppression Fund created in
30 Section 65A-8-6.1 to be used by the Division of Sovereign Lands and Forestry to capitalize the
31 fund.

- 2 -

1 (6) (a) There is created within the General Fund a restricted account known as the
2 "Cigarette Tax Restricted Account."
3 (b) The amount provided in Subsection (5)(a) shall be annually deposited into the
4 restricted account.
5 (c) The Division of Finance shall:
6 (i) administer the restricted account; and
7 (ii) distribute the revenues as provided in Subsection (5)(a).
8 Section 3. Effective date.
9 This act takes effect on July 1, 1997.




Legislative Review Note
as of 2-11-97 2:42 PM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

- 3 -