1     
ELECTRONIC CIGARETTE AND OTHER NICOTINE

2     
PRODUCT TAX AMENDMENTS

3     
2023 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Curtis S. Bramble

6     
House Sponsor: Ryan D. Wilcox

7     

8     LONG TITLE
9     General Description:
10          This bill modifies tax provisions in the Electronic Cigarette and Nicotine Product
11     Taxation and Licensing Act.
12     Highlighted Provisions:
13          This bill:
14          ▸     provides for proportional reductions in the amounts distributed from the Electronic
15     Cigarette Substance and Nicotine Product Tax Restricted Account (the account) if
16     the revenue deposited into the account is insufficient to fund the statutory amounts;
17          ▸     extends the use of the account revenue to include funding compliance personnel
18     within the State Tax Commission; and
19          ▸     requires the State Tax Commission to:
20               •     increase enforcement of the collection of the electronic cigarette and nicotine
21     product tax;
22               •     conduct a study on enforcement and collection of the electronic cigarette and
23     nicotine product tax; and
24               •     report the State Tax Commission's findings and recommendations to the
25     Revenue and Taxation Interim Committee.
26     Money Appropriated in this Bill:
27          None
28     Other Special Clauses:
29          This bill provides a coordination clause.
30     Utah Code Sections Affected:
31     AMENDS:
32          59-14-807, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 20
33     ENACTS:
34          59-14-809, Utah Code Annotated 1953
35     Utah Code Sections Affected by Coordination Clause:
36          59-14-807, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 20
37          59-14-809, Utah Code Annotated 1953
38     

39     Be it enacted by the Legislature of the state of Utah:
40          Section 1. Section 59-14-807 is amended to read:
41          59-14-807. Electronic Cigarette Substance and Nicotine Product Tax Restricted
42     Account.
43          (1) There is created within the General Fund a restricted account known as the
44     "Electronic Cigarette Substance and Nicotine Product Tax Restricted Account."
45          (2) The Electronic Cigarette Substance and Nicotine Product Tax Restricted Account
46     consists of:
47          (a) [revenues] revenue collected from the tax imposed by Section 59-14-804; and
48          (b) amounts appropriated by the Legislature.
49          (3) (a) For each fiscal year[, beginning with fiscal year 2021], and subject to
50     appropriation by the Legislature, the Division of Finance shall distribute from the Electronic
51     Cigarette Substance and Nicotine Product Tax Restricted Account:
52          [(a)] (i) $2,000,000, which shall be allocated to the local health departments by the
53     Department of Health using the formula created in accordance with Section 26A-1-116;
54          [(b)] (ii) $2,000,000 to the Department of Health for statewide cessation programs and
55     prevention education;
56          [(c)] (iii) $1,180,000 to the Department of Public Safety for law enforcement officers
57     aimed at disrupting organizations and networks that provide tobacco products, electronic
58     cigarette products, nicotine products, and other illegal controlled substances to minors;
59          [(d)] (iv) $3,000,000, which shall be allocated to the local health departments by the
60     Department of Health using the formula created in accordance with Section 26A-1-116;
61          [(e)] (v) $5,084,200 to the State Board of Education for school-based prevention
62     programs; and
63          [(f)] (vi) $2,000,000 to the Department of Health for alcohol, tobacco, and other drug
64     prevention, reduction, cessation, and control programs that promote unified messages and
65     make use of media outlets, including radio, newspaper, billboards, and television.
66          (b) If the amount in the Electronic Cigarette Substance and Nicotine Product Tax
67     Restricted Account is insufficient to cover the distributions described in Subsection (3)(a), the
68     distribution amounts shall be adjusted proportionately.
69          (4) (a) The local health departments shall use the money received in accordance with
70     Subsection (3)(a) for enforcing:
71          (i) the regulation provisions described in Section 26-57-103;
72          (ii) the labeling requirement described in Section 26-57-104; and
73          (iii) the penalty provisions described in Section 26-62-305.
74          (b) The Department of Health shall use the money received in accordance with
75     Subsection [(3)(b)] (3)(a)(ii) for the Youth Electronic Cigarette, Marijuana, and Other Drug
76     Prevention Program created in Section 26-7-10.
77          (c) The local health departments shall use the money received in accordance with
78     Subsection [(3)(d)] (3)(a)(iv) to issue grants under the Electronic Cigarette, Marijuana, and
79     Other Drug Prevention Grant Program created in Section 26A-1-129.
80          (d) The State Board of Education shall use the money received in accordance with
81     Subsection [(3)(e)] (3)(a)(v) to distribute to local education agencies to pay for:
82          (i) stipends for positive behaviors specialists as described in Subsection
83     53G-10-407(4)(a)(i);
84          (ii) the cost of administering the positive behaviors plan as described in Subsection
85     53G-10-407(4)(a)(ii); and
86          (iii) the cost of implementing an Underage Drinking and Substance Abuse Prevention
87     Program in grade 4 or 5, as described in Subsection 53G-10-406(3)(b).
88          (5) (a) The fund shall earn interest.
89          (b) All interest earned on fund money shall be deposited into the fund.
90          (6) Subject to legislative appropriations, funds remaining in the Electronic Cigarette
91     Substance and Nicotine Product Tax Restricted Account after the distribution described in
92     Subsection (3) may only be used for:
93          (a) funding commission personnel to enforce compliance with the tax collection
94     requirements of this part; and
95          (b) programs and activities related to the prevention and cessation of electronic
96     cigarette, nicotine products, marijuana, and other drug use.
97          Section 2. Section 59-14-809 is enacted to read:
98          59-14-809. Commission study on enforcement and collection of tax.
99          (1) The commission shall:
100          (a) implement increased enforcement of the tax imposed by this part; and
101          (b) study issues related to increased enforcement and compliance with the requirements
102     of this part.
103          (2) The study shall include a review of:
104          (a) the impact of increased enforcement on collections of the tax imposed by this part;
105          (b) options for long-term funding of increased enforcement of the tax imposed by this
106     part;
107          (c) the sufficiency of collections of the tax imposed by this part to fund distributions
108     from the Electronic Cigarette Substance and Nicotine Product Tax Restricted Account under
109     Section 59-14-807;
110          (d) impacts of a lack of federal regulation of electronic cigarettes on enforcement and
111     compliance efforts; and
112          (e) potential impacts on compliance of changing the incidence of taxation to a tax
113     imposed on the retail sale of an electronic cigarette substance or prefilled electronic cigarette.
114          (3) The commission shall annually report the commission's findings and
115     recommendations on the study items described in Subsections (2)(a) through (d) to the
116     Revenue and Taxation Interim Committee on or before the September interim meeting.
117          (4) The commission shall report the commission's findings and recommendations on
118     the study item described in Subsection (2)(e) to the Revenue and Taxation Interim Committee
119     on or before the September 2023 interim meeting.
120          Section 3. Coordinating S.B. 263 with H.B. 460 -- Technical amendments.
121          If this S.B. 263 and H.B. 460, Settlement Fund Amendments, both pass and become
122     law, it is the intent of the Legislature that the Office of Legislative Research and General
123     Counsel, in preparing the Utah Code database for publication:
124          (1) modify Subsection 59-14-807(3)(b) in this S.B. 263 to read:
125          "(b) If the amount in the Electronic Cigarette Substance and Nicotine Product Proceeds
126     Restricted Account is insufficient to cover the distributions described in Subsection (3)(a), the
127     distribution amounts shall be adjusted proportionately."; and
128          (2) modify Subsection 59-14-809(2)(c) in this S.B. 263 to read:
129          "(c) the sufficiency of collections of the tax imposed by this part to fund distributions
130     from the Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account
131     under Section 59-14-807;".