Revision: Jan. 11, 2023, 10:43 a.m.
HB 510-FN - AS INTRODUCED
2023 SESSION
23-0692
08/05
HOUSE BILL 510-FN
AN ACT relative to removing the exemption for premium cigars from the tobacco tax.
SPONSORS: Rep. Horrigan, Straf. 10
COMMITTEE: Ways and Means
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ANALYSIS
This bill removes the exemption for premium cigars from the tobacco tax.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
23-0692
08/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Three
AN ACT relative to removing the exemption for premium cigars from the tobacco tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Other Tobacco Products; Premium Cigars. Amend RSA 78:1, VII to read as follows:
VII. "Other tobacco products" means tobacco products other than "cigarettes," as defined in RSA 78:1, I. [The term does not include "premium cigars," as defined in RSA 78:1, IX.]
2 Definitions; Tobacco Products. Amend RSA 78:1, XIII to read as follows:
XIII. "Tobacco products" means any product containing, made, or derived from tobacco or nicotine that is intended for human consumption, including but not limited to cigarettes, electronic cigarettes, loose tobacco, smokeless tobacco, and cigars. Tobacco products shall not include [premium cigars or] any product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product and is being marketed and sold exclusively for such approved use.
3 Tax Imposed; Premium Cigars. Amend RSA 78:2, II(c) to read as follows:
(c) The tax under this paragraph 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 shall be imposed on premium cigars.]
4 Repeal. RSA 78:1, IX, relative to the definition of premium cigars, is repealed.
5 Effective Date. This act shall take effect July 1, 2023.
23-0692
1/9/23
HB 510-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to removing the exemption for premium cigars from the tobacco tax.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
Expenditures | $0 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ ] Other | |||
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METHODOLOGY:
This bill allows for the taxing of premium cigars effective July 1, 2023. The Department of Revenue Administration states it cannot estimate the exact impact on general fund revenue as it does not have complete data on the wholesale price of premium cigars sold or distributed in New Hampshire. The Department does have data on the total wholesale sales prices of all premium cigars sold or distributed in New Hampshire by licensed wholesalers who distribute or sell tobacco products other than cigarettes in New Hampshire. However, if an entity/person sells or distributes only premium cigars they are not required to obtain a license and file returns with the Department.
The Department states for FY 2022 returns, licensed wholesalers reported a total wholesale price for premium cigars of $1,487,549. Applying the 65.03% Other Tobacco Product rate to the reported wholesale price for premium cigars results in an estimated revenue increase of $967,000. This does not account for any revenue that would be generated on the premium cigars that are sold or distributed in New Hampshire by entities that currently are not licensed and do not provide information to the Department.
It should be noted that tobacco tax revenue is remitted in the month following its collection. As a result, this new tax revenue from premium cigars would not start to be remitted back to the State until August 2023, assuming a July 1, 2023 effective date. This would result in the first year revenue being less than in subsequent years.
The Department would need to update all necessary tax forms and electronic management systems to reflect the tax on premium cigars; however, it is not anticipated this will result in any additional administrative costs that could not be absorbed in the Department's operating budget.
AGENCIES CONTACTED:
Department of Revenue Administration