Senate File 128 - Enrolled PAG LIN 1 1 SENATE FILE 128 1 2 1 3 AN ACT 1 4 RELATING TO AN INCREASE IN THE TAXES ON CIGARETTES AND TOBACCO 1 5 PRODUCTS, IMPOSING AN INVENTORY TAX ON TOBACCO PRODUCTS, 1 6 CREATING A HEALTH CARE TRUST FUND, PROVIDING FOR A STANDING 1 7 APPROPRIATION, AND PROVIDING AN EFFECTIVE DATE AND PROVIDING 1 8 AN APPLICABILITY PROVISION. 1 9 1 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 11 1 12 Section 1. Section 421B.2, subsection 3, paragraph b, Code 1 13 2007, is amended to read as follows: 1 14 b. The cost of doing business by the retailer is presumed 1 15 to be six eight percent of the basic cost of cigarettes in the 1 16 absence of proof of a lesser or higher cost plus the full face 1 17 value of any stamps which may be required by any cigarette tax 1 18 act of this state to the extent not already included in the 1 19 basic cost of cigarettes. 1 20 Sec. 2. Section 421B.2, subsection 4, paragraph b, Code 1 21 2007, is amended to read as follows: 1 22 b. The cost of doing business by the wholesaler is 1 23 presumed to be three four percent of the basic cost of 1 24 cigarettes in the absence of proof of a lesser or higher cost, 1 25 which includes cartage to the retail outlet, plus the full 1 26 face value of any stamps which may be required by any 1 27 cigarette tax act of this state to the extent not already 1 28 included in the basic cost of cigarettes. 1 29 Sec. 3. Section 453A.6, subsection 1, Code 2007, is 1 30 amended to read as follows: 1 31 1. There is imposed, and shall be collected and paid to 1 32 the department, the following taxes a tax on all cigarettes 1 33 used or otherwise disposed of in this state for any purpose 1 34 whatsoever: 1 35 Class A. On cigarettes weighing not more than three pounds 2 1 per thousand, eighteen mills on each such cigarette. 2 2 Class B. On cigarettes weighing more than three pounds per 2 3 thousand, eighteen mills equal to six and eight=tenths cents 2 4 on each such cigarette. 2 5 Sec. 4. Section 453A.6, Code 2007, is amended by adding 2 6 the following new subsection: 2 7 NEW SUBSECTION. 7. Cigarettes shall be sold only in 2 8 packages of twenty or more cigarettes. 2 9 Sec. 5. Section 453A.35, Code 2007, is amended to read as 2 10 follows: 2 11 453A.35 TAX AND FEES PAID TO GENERAL FUND == STANDING 2 12 APPROPRIATION TO HEALTH CARE TRUST FUND. 2 13 1. The proceeds derived from the sale of stamps and the 2 14 payment of taxes, fees and penalties provided for under this 2 15 chapter, and the permit fees received from all permits issued 2 16 by the department, shall be credited to the general fund of 2 17 the state. However, beginning July 1, 2007, of the revenues 2 18 generated from the tax on cigarettes pursuant to section 2 19 453A.6, subsection 1, and from the tax on tobacco products as 2 20 specified in section 453A.43, subsections 1, 2, 3, and 4, and 2 21 credited to the general fund of the state under this 2 22 subsection, there is appropriated, annually, to the health 2 23 care trust fund created in section 453A.35A, the first one 2 24 hundred twenty=seven million six hundred thousand dollars. 2 25 2. All permit fees provided for in this chapter and 2 26 collected by cities in the issuance of permits granted by the 2 27 cities shall be paid to the treasurer of the city where the 2 28 permit is effective, or to another city officer as designated 2 29 by the council, and credited to the general fund of the city. 2 30 Permit fees so collected by counties shall be paid to the 2 31 county treasurer. 2 32 Sec. 6. NEW SECTION. 453A.35A HEALTH CARE TRUST FUND. 2 33 A health care trust fund is created in the office of the 2 34 treasurer of state. The fund consists of the revenues 2 35 generated from the tax on cigarettes pursuant to section 3 1 453A.6, subsection 1, and from the tax on tobacco products as 3 2 specified in section 453A.43, subsections 1, 2, 3, and 4, that 3 3 are credited to the general fund of the state and appropriated 3 4 to the health care trust fund, annually, pursuant to section 3 5 453A.35. Moneys in the fund shall be separate from the 3 6 general fund of the state and shall not be considered part of 3 7 the general fund of the state. However, the fund shall be 3 8 considered a special account for the purposes of section 8.53 3 9 relating to generally accepted accounting principles. Moneys 3 10 in the fund shall be used only as specified in this section 3 11 and shall be appropriated only for the uses specified. Moneys 3 12 in the fund are not subject to section 8.33 and shall not be 3 13 transferred, used, obligated, appropriated, or otherwise 3 14 encumbered, except as provided in this section. 3 15 Notwithstanding section 12C.7, subsection 2, interest or 3 16 earnings on moneys deposited in the fund shall be credited to 3 17 the fund. 3 18 Moneys in the fund shall be used only for purposes related 3 19 to health care, substance abuse treatment and prevention, and 3 20 tobacco use prevention, cessation, and control. 3 21 Sec. 7. Section 453A.40, subsection 1, Code 2007, is 3 22 amended to read as follows: 3 23 1. All persons required to obtain a permit or to be 3 24 licensed under section 453A.13 as distributors or section 3 25 453A.44 having in their possession and held for resale on the 3 26 effective date of an increase in the tax rate cigarettes, or 3 27 little cigars, or tobacco products upon which the tax under 3 28 section 453A.6 or 453A.43 has been paid, unused cigarette tax 3 29 stamps which have been paid for under section 453A.8, or 3 30 unused metered imprints which have been paid for under section 3 31 453A.12, or tobacco products for which the tax has not been 3 32 paid under section 453A.46 shall be subject to an inventory 3 33 tax on the items as provided in this section. 3 34 Sec. 8. Section 453A.42, Code 2007, is amended by adding 3 35 the following new subsection: 4 1 NEW SUBSECTION. 11A. "Snuff" means any finely cut, 4 2 ground, or powdered tobacco that is not intended to be smoked. 4 3 Sec. 9. Section 453A.42, subsection 14, Code 2007, is 4 4 amended to read as follows: 4 5 14. "Tobacco products" means cigars; little cigars as 4 6 defined herein; cheroots; stogies; periques; granulated, plug 4 7 cut, crimp cut, ready rubbed, and other smoking tobacco; 4 8 snuff; snuff flour; cavendish; plug and twist tobacco; 4 9 fine=cut and other chewing tobaccos; shorts; refuse scraps, 4 10 clippings, cuttings and sweepings of tobacco, and other kinds 4 11 and forms of tobacco, prepared in such manner as to be 4 12 suitable for chewing or smoking in a pipe or otherwise, or 4 13 both for chewing and smoking; but shall not include cigarettes 4 14 as defined in section 453A.1, subsection 3. 4 15 Sec. 10. Section 453A.43, Code 2007, is amended to read as 4 16 follows: 4 17 453A.43 TAX ON TOBACCO PRODUCTS. 4 18 1. a. A tax is imposed upon all tobacco products in this 4 19 state and upon any person engaged in business as a distributor 4 20 of tobacco products, at the rate of twenty=two percent of the 4 21 wholesale sales price of the tobacco products, except little 4 22 cigars and snuff as defined in section 453A.42. 4 23 b. In addition to the tax imposed under paragraph "a", a 4 24 tax is imposed upon all tobacco products in this state and 4 25 upon any person engaged in business as a distributor of 4 26 tobacco products, at the rate of twenty=eight percent of the 4 27 wholesale sales price of the tobacco products, except little 4 28 cigars and snuff as defined in section 453A.42, with the 4 29 limitation that if the tobacco product is a cigar, the 4 30 additional tax shall not exceed fifty cents per cigar. 4 31 c. Little cigars shall be subject to the same rate of tax 4 32 imposed upon cigarettes in section 453A.6, payable at the time 4 33 and in the manner provided in section 453A.6; and stamps shall 4 34 be affixed as provided in division I of this chapter. Snuff 4 35 shall be subject to the tax as provided in subsections 3 and 5 1 4. 5 2 d. The tax taxes on tobacco products, excluding little 5 3 cigars and snuff, shall be imposed at the time the distributor 5 4 does any of the following: 5 5 a. (1) Brings, or causes to be brought, into this state 5 6 from without outside the state tobacco products for sale. 5 7 b. (2) Makes, manufactures, or fabricates tobacco 5 8 products in this state for sale in this state. 5 9 c. (3) Ships or transports tobacco products to retailers 5 10 in this state, to be sold by those retailers. 5 11 2. a. A tax is imposed upon the use or storage by 5 12 consumers of tobacco products in this state, and upon the 5 13 consumers, at the rate of twenty=two percent of the cost of 5 14 the tobacco products. 5 15 b. In addition to the tax imposed in paragraph "a", a tax 5 16 is imposed upon the use or storage by consumers of tobacco 5 17 products in this state, and upon the consumers, at a rate of 5 18 twenty=eight percent of the cost of the tobacco products, with 5 19 the limitation that if the tobacco product is a cigar, the 5 20 additional tax shall not exceed fifty cents per cigar. 5 21 c. The tax taxes imposed by this subsection shall not 5 22 apply if the tax taxes imposed by subsection 1 on the tobacco 5 23 products has have been paid. 5 24 d. This tax The taxes imposed under this subsection shall 5 25 not apply to the use or storage of tobacco products in 5 26 quantities of: 5 27 a. (1) Less than 25 twenty=five cigars. 5 28 b. Less than 10 oz. snuff or snuff powder. 5 29 c. (2) Less than 1 lb. one pound smoking or chewing 5 30 tobacco or other tobacco products not specifically mentioned 5 31 herein, in the possession of any one consumer. 5 32 3. A tax is imposed upon all snuff in this state and upon 5 33 any person engaged in business as a distributor of snuff at 5 34 the rate of one dollar and nineteen cents per ounce, with a 5 35 proportionate tax at the same rate on all fractional parts of 6 1 an ounce of snuff. The tax shall be computed based on the net 6 2 weight listed by the manufacturer. The tax on snuff shall be 6 3 imposed at the time the distributor does any of the following: 6 4 a. Brings or causes to be brought into this state from 6 5 outside the state, snuff for sale. 6 6 b. Makes, manufactures, or fabricates snuff in this state 6 7 for sale in this state. 6 8 c. Ships or transports snuff to retailers in this state, 6 9 to be sold by those retailers. 6 10 4. A tax is imposed upon the use or storage by consumers 6 11 of snuff in this state, and upon the consumers, at the rate of 6 12 one dollar and nineteen cents per ounce with a proportionate 6 13 tax at the same rate on all fractional parts of an ounce of 6 14 snuff. The tax shall be computed based on the net weight as 6 15 listed by the manufacturer. 6 16 The tax imposed by this subsection shall not apply if the 6 17 tax imposed by subsection 3 on snuff has been paid. 6 18 The tax shall not apply to the use or storage of snuff in 6 19 quantities of less than ten ounces. 6 20 3. 5. Any tobacco product with respect to which a tax has 6 21 once been imposed under this division shall not again be 6 22 subject to tax under said this division, except as provided in 6 23 section 453A.40. 6 24 4. 6. The tax imposed by this section shall not apply 6 25 with respect to any tobacco product which under the 6 26 Constitution and laws of the United States may not be made the 6 27 subject of taxation by this state. 6 28 5. 7. The tax imposed by this section shall be in 6 29 addition to all other occupation or privilege taxes or license 6 30 fees now or hereafter imposed by any city or county. 6 31 6. 8. All excise taxes collected under this chapter by a 6 32 distributor or any individual are deemed to be held in trust 6 33 for the state of Iowa. 6 34 Sec. 11. APPLICABILITY. Notwithstanding section 453A.40 6 35 as amended in this Act, persons required to obtain a permit or 7 1 license as specified in that section shall not be subject to 7 2 an inventory tax on the items as provided in that section as a 7 3 result of the tax increases provided in this Act. 7 4 Sec. 12. EFFECTIVE DATE. This Act, being deemed of 7 5 immediate importance, takes effect upon enactment. 7 6 7 7 7 8 7 9 JOHN P. KIBBIE 7 10 President of the Senate 7 11 7 12 7 13 7 14 PATRICK J. MURPHY 7 15 Speaker of the House 7 16 7 17 I hereby certify that this bill originated in the Senate and 7 18 is known as Senate File 128, Eighty=second General Assembly. 7 19 7 20 7 21 7 22 MICHAEL E. MARSHALL 7 23 Secretary of the Senate 7 24 Approved , 2007 7 25 7 26 7 27 7 28 CHESTER J. CULVER 7 29 Governor