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First Substitute H.B. 312

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Mar 2, 2004 at 3:44 PM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Mar 2, 2004 at 3:45 PM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Mar 2, 2004 at 3:53 PM by rday. -->

Representative David Ure proposes the following substitute bill:


             1     
NONPARTICIPATING TOBACCO

             2     
MANUFACTURER'S FEE

             3     
2004 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: David Ure

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Cigarette and Tobacco Tax and Licensing Act by imposing an
             10      equity assessment on nonparticipating manufacturer cigarettes.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines terms;
             14          .    levies an equity assessment of 1.75 cents per cigarette on nonparticipating tobacco
             15      product manufacturers; and
             16          .    designates cigarettes in violation of this section as contraband goods.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20           S [ None ] THIS BILL TAKES EFFECT ON JULY 1, 2004. s
             21      Utah Code Sections Affected:
             21a      S AMENDS:
             21b          59-14-213, AS LAST AMENDED BY CHAPTERS 52 AND 175, LAWS OF UTAH 2002 s
             22      ENACTS:
             23      S [     59-14-213, as last amended by Chapters 52 and 175, Laws of Utah 2002 ] s
             24          59-14-214, Utah Code Annotated 1953
             25     

             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 59-14-213 is amended to read:
             28           59-14-213. Contraband goods.
             29          (1) Any cigarettes in violation of any state or federal law, including Sections
             30      59-14-203 , 59-14-205 , 59-14-211 [or], Subsection 59-14-212 (1), or Section 59-14-214 are
             31      contraband goods and may be seized without a warrant by the commission, its employees, or
             32      any peace officer of the state or its political subdivisions.
             33          (2) Any goods seized pursuant to Subsection (1) shall be delivered to the commission
             34      and destroyed.
             35          (3) Any cigarettes, as defined in Subsection 59-22-202 (4), in violation of Subsection
             36      59-14-408 (2) are contraband goods and may be seized in accordance with Subsections (1) and
             37      (2).
             38          Section 2. Section 59-14-214 is enacted to read:
             39          59-14-214. Nonparticipating manufacturer equity assessment.
             40          (1) As used in this section, "nonparticipating manufacturer" means a tobacco product
             41      manufacturer, as defined in Subsection 59-22-202 (9), that is not a participating manufacturer
             42      within the meaning of Subsection II(jj) of the Master Settlement Agreement, as defined in
             43      Subsection 59-22-202 (5).
             44          (2) (a) There is levied an equity assessment, at the rate of 1.75 cents on each cigarette,
             45      for all cigarette packages of nonparticipating manufacturers to which a stamp is affixed as
             46      required under Section 59-14-205 .
             47          (b) The equity assessment imposed by this section is in addition to all other
             48      assessments, fees, and taxes levied under existing law.
             49          (c) The equity assessment imposed by this section shall be paid by affixing a stamp in
             50      the manner and at the time described in Section 59-14-205 .
             51          (d) Except as otherwise provided in this section, the equity assessment shall be
             52      collected, paid, administered, and enforced in the same manner as the tax on cigarettes levied
             53      by Section 59-14-204 .
             54          (3) The purposes of this equity assessment are:
             55          (a) to recover health care costs to the state imposed by nonparticipating manufacturers;
             56          (b) to prevent nonparticipating manufacturers from undermining the state's policy of

             57      reducing underage smoking by offering cigarettes for sale substantially below the prices of
             58      cigarettes of other manufacturers;
             59          (c) to protect funding, which is reduced as a result of the growth of nonparticipating
             60      manufacturer cigarette sales, for programs funded in whole or in part by payments to the state
             61      under the Master Settlement Agreement, as defined in Subsection 59-22-202 (5);
             62          (d) to recoup settlement-payment revenue lost to the state as a result of
             63      nonparticipating manufacturer cigarette sales; and
             64          (e) to fund enforcement and administration of:
             65          (i) Section 59-14-408 ;
             66          (ii) Sections 59-22-201 through 59-22-203 , related to nonparticipating manufacturers;
             67      and
             68          (iii) the equity assessment imposed by this section.
             69          (4) (a) Each manufacturer, distributor, wholesaler, or retail dealer who under Section
             70      59-14-205 affixes a stamp to a package of cigarettes, shall report monthly to the commission
             71      for each place of business, the number and denominations of stamps affixed to individual
             72      packages of nonparticipating manufacturer cigarettes sold by the manufacturer, distributor,
             73      wholesaler, or retail dealer in the preceding month, including the manufacturer and brand
             74      family.
             75          (b) A person required to file a report under this section is subject to the penalties under
             76      Section 59-1-401 for failing to file a report in a timely manner, or for supplying false or
             77      fraudulent information.
             77a      S SECTION 3. EFFECTIVE DATE.
             77b          THIS BILL TAKES EFFECT JULY 1, 2004. s




Legislative Review Note
    as of 2-13-04 4:49 PM

This bill requires all nonparticipating tobacco manufacturers to pay an equity assessment fee on
cigarettes sold in this state. This assessment is in addition to the state's escrow requirements for
nonparticipating manufacturers. The application of the assessment to nonparticipating
manufacturers only may violate the Equal Protection Clause and Due Process Clause of the
14th Amendment to the U.S. Constitution. The statute may withstand an equal protection and
due process challenge if the court determines that the Legislature's treatment of
nonparticipating manufacturers is rationally related to a legitimate governmental interest.

Office of Legislative Research and General Counsel

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