MODEL BILLS

Tobacco Tax Act

Summary: The Tobacco Tax Act taxes tobacco products to deter smoking and generate revenue.

SECTION 1. SHORT TITLE

This Act shall be called the “Tobacco Tax Revenue Act.”

SECTION 2. DEFINITIONS

After subsection XXX, the following new subsection XXX shall be inserted:

1. “Other tobacco product” means:

a. Any cigar or roll for smoking, other than a cigarette, made in whole or in part of tobacco; or

b. Any other tobacco or product containing tobacco, other than a cigarette, that is intended for human consumption by smoking, by insertion into the mouth or nose, or by other means.

2. “Wholesaler” means, unless the context requires otherwise:

a. A person who acts as a wholesaler as defined in [citation to state law referring to cigarette wholesalers]; or

b. A person who:

(1) Holds other tobacco products for sale to another person or entity for resale; or

(2) Sells other tobacco products to another person or entity for resale.

3. “Wholesale price” means the price for which a wholesaler sells other tobacco products to a retailer, exclusive of any discount, trade allowance, rebate, or other reduction.

SECTION 3. TOBACCO TAX RATES

Section XXX is hereby repealed and the following new section XXX is inserted:

1. Except as otherwise provided in this section, the tobacco tax rate for cigarettes is:

a. $X.XX for each package that contains 20 or fewer cigarettes, whether sold or provided as a free sample.

b. XX.X cents for each cigarette in a package that contains more than 20 cigarettes, whether sold or provided as a free sample.

2. The tobacco tax rate for other tobacco products is 45 percent of the wholesale price of the other tobacco products, whether sold or provided as a free sample.

3. The requirement under this subsection includes:

a. Cigarettes and other tobacco products in vending machines or other mechanical dispensers.

b. Cigarettes and other tobacco products generally referred to as “floor stock” in packages that bear stamps issued by the [Comptroller] for an amount less than the full tax imposed.

c. Cigarettes and other tobacco products delivered to consumers in the state by mail, common carrier, or other delivery service.

4. No cigarette or other tobacco product shall be sold or delivered to a consumer without a tax stamp issued by the [Comptroller] that shows the tax has been paid.

5. All cigarettes and other tobacco products held for sale by any person that bear a tax stamp issued by the [Comptroller] in a value less than the full tax imposed must be stamped with the additional stamps necessary to make the aggregate value equal to the full tax imposed. However, in lieu of the additional stamps necessary to make the aggregate tax value equal to the full tax imposed, the [Comptroller] may provide an alternate method of collecting the additional tax.

6. The [Comptroller] shall establish, by regulation, a system of administering, collecting and enforcing the tobacco tax on other tobacco products. Regulations adopted under this section may include:

a. Self-assessment, filing of returns, and maintenance and retention of records by wholesalers or retailers.

b. Payment of the tax by:

(1) A wholesaler who sells other tobacco products to a retailer or consumer in the state; or

(2) A retailer or consumer who possesses other tobacco products in the state on which the tobacco tax has not been paid.

c. Any other provision that the [Comptroller] considers necessary to efficiently and economically administer, collect and enforce the tax.

SECTION 4. EFFECTIVE DATE

This Act shall take effect on July 1, 20XX.