HB 156-FN-A – AS INTRODUCED
2011 SESSION
09/03
HOUSE BILL 156-FN-A
AN ACT reducing the rates of the tobacco tax.
SPONSORS: Rep. Weyler, Rock 8; Rep. Sapareto, Rock 5; Rep. Osgood, Sull 4; Rep. R. Ober, Hills 27; Rep. L. Ober, Hills 27
This bill reduces the rates of the tobacco tax on cigarettes and on tobacco products other than cigarettes.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0185
09/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT reducing the rates of the tobacco tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Tobacco Tax Rate Reduced. Amend RSA 78:7 to read as follows:
78:7 Tax Imposed. A tax upon the retail consumer is hereby imposed at the rate of [$1.78]$1.68 for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes, on all cigarettes sold at retail in this state. The payment of the tax shall be evidenced by affixing stamps to the smallest packages containing the cigarettes in which such products usually are sold at retail. The word "package'' as used in this section shall not include individual cigarettes. No tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.
2 Tobacco Products Other Than Cigarettes; Tax Rate Reduced. 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 [65.03] 48 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. No such tax shall be imposed on premium cigars.
3 Applicability. Sections 1 and 2 of this act shall apply to all persons licensed under RSA 78:2. Such persons shall inventory all cigarettes and 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, 2011 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 Effective Date. This act shall take effect July 1, 2011.
LBAO
11-0185
12/27/10
HB 156-FN-A - FISCAL NOTE
AN ACT reducing the rates of the tobacco tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will decrease state revenues by an indeterminable amount in FY 2012 and each fiscal year thereafter, and increase state expenditures by $1,192,370 in FY 2012. There will be no fiscal impact on county and local revenues or expenditures.
METHODOLOGY:
The Department states this bill will decrease the tobacco tax rates on cigarettes from $1.78 per pack to $1.68 per pack and decrease the tobacco tax on other tobacco products (OTP) from 65.03% to 48% of product’s wholesale price. The Department states they are unable to determine the exact fiscal impact at this time since the impact on state revenues will depend on its effect on sales. In FY 2010, cigarette stamp sales minus the floor tax revenues totaled $227,458,830, based on an estimate 127,785,860 cigarette packs sold. The Department estimates if sales in FY 2012 were consistent with those of FY 2010, this bill would decrease cigarette tax revenue by $12,778,586 ($0.10 X 127,785,860 packs). For other tobacco products, FY 2010 revenue totaled $7,835,027, based on a wholesale price base of $12,048,327. The Department estimates if sales in FY 2012 were consistent with FY 2010, this bill would decrease OTP revenue by $2,051,830 (17.03% X $12,048,327 tax base). Assuming no change in sales from FY 2010, the total revenue decrease is estimated at approximately $14,830,416 ($12,778,586 + $2,051,860) in FY 2012.
However, the Department states the proposed decrease in the tobacco tax rate may actually increase sales by 2.7026% for cigarettes and 23.0236% for OTP. Using these projected sales growth rates, the Department estimates this bill could result in cigarette tax revenue of $220,482,193 [(127,785,960 X 1.027026) X $1.68], a decrease of $6,976,637 ($227,458,830 –$220,482,193). The Department estimates an OTP sales growth of 23.0236%. As a result, this bill could result in OTP revenue of approximately $7,114,697 [(12,048,327 X 1.230236) X 48%], a decrease of $720,330 ($7,835,027 –$7,114,697). Assuming sales growth at the rates stated above, the total revenue decrease is estimated at approximately $7,696,967 ($6,976,637 + $720,330) in FY 2012.
Although the Department is unable to determine the exact fiscal impact of this bill, they estimate the decrease in state revenue could total anywhere between $7,696,967 and $14,830,416 in FY 2012. The Department did not provide a projection of this bill’s fiscal impact beyond FY 2012.
The Department states this bill also includes a “reverse floor tax” or a refund to wholesalers for the difference between old and new tax rates on products remaining in inventory as of this bill’s effective date. In FY 2010, an increase in the tobacco tax resulted in a floor tax assessed on 10,274,027 packs of cigarettes. Using the same number of packs and OTP equivalents, the Department estimates this bill will result in $1,192,370 in refunds paid in FY 2012. The Department states it would incur some additional costs for reprogramming the Department’s computer systems for the rate changes, form revision, and auditing refunds, but these costs could be absorbed within their existing budget.