HB 567-FN-A – AS INTRODUCED
2009 SESSION
09/01
HOUSE BILL 567-FN-A
AN ACT redefining tobacco products, increasing the tax on tobacco products other than cigarettes, and dedicating the increase to a tobacco use prevention and cessation program fund.
SPONSORS: Rep. Pilliod, Belk 5; Rep. Osborne, Merr 12
This bill redefines tobacco products for purposes of the tobacco tax and increases the tax on tobacco products other than cigarettes.
The bill also establishes a tobacco use prevention and cessation program fund to be administered by the department of health and human services, and designates the increase in the tax on tobacco products other than cigarettes to such fund. The bill specifies that 10 percent of moneys in the fund be used for a youth tobacco use prevention and empowerment program.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0633
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT redefining tobacco products, increasing the tax on tobacco products other than cigarettes, and dedicating the increase to a tobacco use prevention and cessation program fund.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Tobacco Tax; Definitions. Amend RSA 78:1, XIV to read as follows:
XIV. “Tobacco products” means cigarettes, cigars, loose tobacco, [and] smokeless tobacco, and snuff.
2 Tax Imposed on Tobacco Products Other Than Cigarettes. Amend RSA 78:7-c to read as follows:
78:7-c Tax Imposed on Tobacco Products Other Than Cigarettes. A tax upon the retail consumer is hereby imposed on tobacco products other than cigarettes at a rate of [19] 31.59 percent of the wholesale sales price. The tax under this section may be rounded to the nearest cent if the commissioner determines that the amount of tax would not thereby be made materially disproportionate. No such tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States. The commissioner shall determine the amount of revenue produced by any tax rate imposed under this section which is over 19 percent and shall certify such amount to the state treasurer for deposit in the tobacco use prevention and cessation program fund established under RSA 126-K:15, II.
3 Applicability. Section 2 of this act shall apply to all persons licensed under RSA 78:2. Such persons shall inventory all taxable tobacco products other than cigarettes in their possession and file a report of such inventory with the department of revenue administration on a form prescribed by the commissioner within 20 days after the effective date of this act. The tax rate effective July 1, 2009 shall apply to such inventory and the difference, if any, in the amount paid previously on such inventory and the current effective rate of tax shall be paid with the inventory form. The inventory form shall be treated as a tax return for the purpose of computing penalties under RSA 21-J.
4 Tobacco Use Prevention and Cessation Program; Fund. Amend RSA 126-K:15 to read as follows:
126-K:15 Tobacco Use Prevention and Cessation Program.
I. There is hereby established in the department of health and human services the tobacco use prevention and cessation program, which shall be administered with funds appropriated to the department for such purpose, and which shall include but not be limited to:
[I.] (a) Tobacco use prevention community programs and grants.
[II.] (b) Tobacco use prevention school programs and grants.
[III.] (c) Tobacco use prevention state-wide programs and grants.
(d) A youth tobacco use prevention and empowerment program.
[IV.] (e) Tobacco use cessation programs.
[V.] (f) Tobacco use prevention and cessation counter marketing.
[VI.] (g) Evaluation of tobacco control initiatives.
[VII.] (h) Administration and enforcement.
II. There is hereby established in the office of the state treasurer the tobacco use prevention and cessation program fund which shall be nonlapsing and continually appropriated to the department of health and human services for the purposes of paragraph I. Ten percent of moneys in the fund shall be used for each fiscal year to implement and maintain a youth tobacco use prevention and empowerment program. Moneys certified by the commissioner under RSA 78:7-c shall be deposited in the tobacco use prevention and cessation program fund.
5 New Subparagraph; Special Fund Established. Amend RSA 6:12, I(b) by inserting after subparagraph (276) the following new subparagraph:
(277) Moneys deposited in the tobacco use prevention and cessation program fund established under RSA 126-K:15, II.
6 Effective Date. This act shall take effect July 1, 2009.
LBAO
09-0633
01/20/09
HB 567-FN-A - FISCAL NOTE
AN ACT redefining tobacco products, increasing the tax on tobacco products other than cigarettes, and dedicating the increase to a tobacco use prevention and cessation program fund.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will increase state revenues by $2,376,582 in FY 2010, $2,193,768 in FY 2011, and by an indeterminable amount in FY 2012 and FY 2013. The Department of Health and Human Services states this bill would increase state restricted expenditures by an indeterminable amount in FY 2010 and each year thereafter. This bill would have no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill increases the tax rate for tobacco products other than cigarettes from 19% to a rate proportional to the tobacco tax rate for cigarettes, at 31.59%. The Department assumes the bill would take effect July 1, 2009 and additional administration cost could be absorbed within the Department’s current operating budget. The Department states this bill will increase state revenues as follows:
|
FY 2010 |
FY 2011 |
Increase in smokeless tobacco tax |
$1,194,617 |
$1,194,617 |
Cigar and snuff tax |
$ 999,151 |
$ 999,151 |
Smokeless floor tax @12.59% |
$ 99,551 |
|
Cigar and snuff tax @ 31.59% |
$ 83,263 |
|
|
$2,376,582 |
$2,193,768 |
Based on FY 2008 smokeless tobacco tax revenues of $1,802,837, the Department projects smokeless tobacco sales for FY 2008 were $9,488,616. The Department assumes this may used as a proxy for the FY 2010 and FY 2011 tax revenue, taking into account sales elasticity from the rate increase. However, because the Department assumes FY 2008 data may not accurately reflect FY 2012 and 2013 tobacco sales, tax revenue is not projected for these years. Given the new rate, the Department estimates state revenues will increase $1,194,617 in FY 2010 and FY 2011 ($9,488,616 smokeless tobacco sales @ 31.59% = $2,997,454 tax revenue, less $1,802,837 revenue under current rate = $1,194,617). Based on cigar sales statistics in Maine, the Department estimates cigars comprise approximately 25% of all smokeless tobacco sales. Thus, cigar sales are projected to be $3,162,872 ($9,488,616 current smokeless tobacco sales = 75% of $12,651,488 smokeless tobacco sales including cigars, $12,651,488 - $9,488,616 = $3,162,872 cigar sales), and smokeless tax revenue from cigars is estimated to be $999,151 in FY 2010 and FY 2011 ($3,162,872 x 31.59%). The Department includes snuff in this projection.
Store’s smokeless tobacco inventory on the effective date of this bill is subject to a floor tax of 12.59% (percentage point difference of proposed and current tax rate, 31.59% and 19%). The Department assumes current inventory is one-twelfth the total yearly sales, thus floor tax is estimated to increase state revenues by $99,551 in FY 2010 ($9,488,616 smokeless tobacco sales/12 months x 12.59% = $99,551). Current cigar and snuff inventory is subject to the full 31.59%, thus floor tax is estimated to increase state revenues by $83,263 in FY 2010 ($3,162,872 cigar sales/12 months x 31.59%).
The Department of Health and Human Services states this bill redefines the definition of tobacco products to mean cigarettes, cigars, loose tobacco, smokeless tobacco, and snuff; increase the tax imposed on tobacco products other than cigarettes from 19% to 31.59% of the wholesale sales price; directs the commissioner of DRA to deposit revenue produced over 19% of the wholesale sales price (the increase) into a newly established continually appropriated and non-lapsing tobacco use prevention and cessation program fund (TUPCPF); and designates 10% of TUPCPF revenue for a youth tobacco use prevention and empowerment program. Although this bill does not establish positions, the Department assumes it would require on Program Specialist III (LG 23) position to manage the increased contract development and monitoring. Assuming costs for salary, benefits, equipment, and travel, the Department estimates position costs at $80,458 in FY 2010, $80,575 in FY 2011, $84,477 in FY 2012, and $88,586 in FY 2013. The balance of the fund would be expended for the tobacco use prevention and cessation program.