Bill Text: MI SB0393 | 2013-2014 | 97th Legislature | Introduced


Bill Title: Taxation; tobacco; cigarette tax; modify. Amends secs. 7 & 12 of 1993 PA 327 (MCL 205.427 & 205.432).

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2013-05-28 - Referred To Committee On Finance [SB0393 Detail]

Download: Michigan-2013-SB0393-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 393

 

 

May 28, 2013, Introduced by Senators HUNE and BRANDENBURG and referred to the Committee on Finance.

 

 

 

     A bill to amend 1993 PA 327, entitled

 

"Tobacco products tax act,"

 

by amending sections 7 and 12 (MCL 205.427 and 205.432), section 7

 

as amended by 2012 PA 325 and section 12 as amended by 2012 PA 188.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 7. (1) Beginning May 1, 1994, a tax is levied on the sale

 

of tobacco products sold in this state as follows:

 

     (a) Through July 31, 2002, for cigars, noncigarette smoking

 

tobacco, and smokeless tobacco, 16% of the wholesale price.

 

     (b) For Through September 30, 2013, for cigarettes, 37.5 mills

 

per cigarette. Beginning October 1, 2013, for cigarettes, 18.75

 

mills per cigarette.

 

     (c) Beginning August 1, 2002 and through September 30, 2013,

 

for cigarettes, in addition to the tax levied in subdivision (b),


 

an additional 15 mills per cigarette. Beginning October 1, 2013,

 

for cigarettes, in addition to the tax levied in subdivision (b),

 

an additional 7.5 mills per cigarette.

 

     (d) Beginning August 1, 2002 and through September 30, 2013,

 

for cigarettes, in addition to the tax levied in subdivisions (b)

 

and (c), an additional 10 mills per cigarette. Beginning October 1,

 

2013, for cigarettes, in addition to the tax levied in subdivisions

 

(b) and (c), an additional 5 mills per cigarette.

 

     (e) Beginning July 1, 2004 and through September 30, 2013, for

 

cigarettes, in addition to the tax levied in subdivisions (b), (c),

 

and (d), an additional 37.5 mills per cigarette. Beginning October

 

1, 2013, for cigarettes, in addition to the tax levied in

 

subdivisions (b), (c), and (d), an additional 18.75 mills per

 

cigarette.

 

     (f) Beginning August 1, 2002 and through June 30, 2004, for

 

cigars, noncigarette smoking tobacco, and smokeless tobacco, 20% of

 

the wholesale price.

 

     (g) Beginning July 1, 2004, for cigars, noncigarette smoking

 

tobacco, and smokeless tobacco, 32% of the wholesale price.

 

However, beginning November 1, 2012 and through October 31, 2016,

 

the amount of tax levied under this subdivision on cigars shall not

 

exceed 50 cents per individual cigar.

 

     (2) On or before the twentieth day of each calendar month,

 

every licensee under section 3 other than a retailer, unclassified

 

acquirer licensed as a manufacturer, or vending machine operator

 

shall file a return with the department stating the wholesale price

 

of each tobacco product other than cigarettes purchased, the


 

quantity of cigarettes purchased, the wholesale price charged for

 

all tobacco products other than cigarettes sold, the number of

 

individual packages of cigarettes and the number of cigarettes in

 

those individual packages, and the number and denominations of

 

stamps affixed to individual packages of cigarettes sold by the

 

licensee for each place of business in the preceding calendar

 

month. The return shall also include the number and denomination of

 

unaffixed stamps in the possession of the licensee at the end of

 

the preceding calendar month. Wholesalers shall also report

 

accurate inventories of cigarettes, both stamped and unstamped at

 

the end of the preceding calendar month. Wholesalers and

 

unclassified acquirers shall also report accurate inventories of

 

affixed and unaffixed stamps by denomination at the beginning and

 

end of each calendar month and all stamps acquired during the

 

preceding calendar month. The return shall be signed under penalty

 

of perjury. The return shall be on a form prescribed by the

 

department and shall contain or be accompanied by any further

 

information the department requires. The department may also

 

require licensees to report cigarette acquisition, purchase, and

 

sales information in other formats and frequency.

 

     (3) To cover the cost of expenses incurred in the

 

administration of this act, at the time of the filing of the

 

return, the licensee shall pay to the department the tax levied in

 

subsection (1) for tobacco products sold during the calendar month

 

covered by the return, less compensation equal to the following:

 

     (a) One percent of the total amount of the tax due on tobacco

 

products sold other than cigarettes.


 

     (b) Through July 31, 2002, 1.25% of the total amount of the

 

tax due on cigarettes sold.

 

     (c) Beginning August 1, 2002, 1.5% of the total amount of the

 

tax due on cigarettes sold and, beginning on June 20, 2012, for

 

sales of untaxed cigarettes to Indian tribes in this state, an

 

amount equal to 1.5% of the total amount of the tax due on those

 

cigarettes sold as if those cigarette sales were taxable sales

 

under this act.

 

     (d) Beginning on the first calendar month following the

 

implementation of the use of digital stamps as provided in section

 

5a(2), for licensees who are stamping agents, 0.5% of the total

 

amount of the tax due on cigarettes sold and, for sales of untaxed

 

cigarettes to Indian tribes in this state, 0.5% of the total amount

 

of the tax due on those cigarettes sold as if those cigarette sales

 

were taxable sales under this act, until the stamping agent is

 

compensated in an amount equal to the direct cost actually incurred

 

by the stamping agent for upgrades to technology and equipment,

 

excluding the equipment reimbursed under subdivision (e), that are

 

necessary to affix the digital stamp as determined by the

 

department.

 

     (e) Beginning in the first calendar month following the

 

implementation of the use of digital stamps as provided in section

 

5a(2) and continuing for the immediately succeeding 17 months, for

 

licensees who are stamping agents, reimbursement of direct costs

 

actually incurred by the stamping agent, as determined by the

 

department, for the initial purchase of eligible equipment in an

 

amount equal to 5.55% of the total net purchase price of the


 

eligible equipment necessary to affix the digital stamp. The

 

reimbursement provided under this subdivision shall exclude

 

reimbursement for any costs for installation or for ongoing

 

maintenance related to eligible equipment. A stamping agent may

 

only receive reimbursement under this subdivision to the extent

 

that the eligible equipment purchased by the stamping agent does

 

not exceed the total number of the stamping agent's existing

 

equipment as certified by the stamping agent on a form prescribed

 

by the department.

 

     (4) Every licensee and retailer who, on August 1, 2002, has on

 

hand for sale any cigarettes upon which a tax has been paid

 

pursuant to subsection (1)(b) shall file a complete inventory of

 

those cigarettes before September 1, 2002 and shall pay to the

 

department at the time of filing this inventory a tax equal to the

 

difference between the tax imposed in subsection (1)(b), (c), and

 

(d) and the tax that has been paid under subsection (1)(b). Every

 

licensee and retailer who, on August 1, 2002, has on hand for sale

 

any cigars, noncigarette smoking tobacco, or smokeless tobacco upon

 

which a tax has been paid pursuant to subsection (1)(a) shall file

 

a complete inventory of those cigars, noncigarette smoking tobacco,

 

and smokeless tobacco before September 1, 2002 and shall pay to the

 

department at the time of filing this inventory a tax equal to the

 

difference between the tax imposed in subsection (1)(f) and the tax

 

that has been paid under subsection (1)(a).

 

     (5) Every licensee and retailer who, on July 1, 2004, has on

 

hand for sale any cigarettes upon which a tax has been paid

 

pursuant to subsection (1)(b), (c), and (d) shall file a complete


 

inventory of those cigarettes before August 1, 2004 and shall pay

 

to the department at the time of filing this inventory a tax equal

 

to the difference between the tax imposed in subsection (1)(b),

 

(c), (d), and (e) and the tax that has been paid under subsection

 

(1)(b), (c), and (d). Every licensee and retailer who, on July 1,

 

2004, has on hand for sale any cigars, noncigarette smoking

 

tobacco, or smokeless tobacco upon which a tax has been paid

 

pursuant to subsection (1)(f) shall file a complete inventory of

 

those cigars, noncigarette smoking tobacco, and smokeless tobacco

 

before August 1, 2004 and shall pay to the department at the time

 

of filing this inventory a tax equal to the difference between the

 

tax imposed in subsection (1)(g) and the tax that has been paid

 

under subsection (1)(f). The proceeds derived under this subsection

 

shall be credited to the Michigan medicaid benefits trust fund

 

created under section 5 of the Michigan trust fund act, 2000 PA

 

489, MCL 12.255.

 

     (6) The department may require the payment of the tax imposed

 

by this act upon the importation or acquisition of a tobacco

 

product. A tobacco product for which the tax under this act has

 

once been imposed and that has not been refunded if paid is not

 

subject upon a subsequent sale to the tax imposed by this act.

 

     (7) An abatement or refund of the tax provided by this act may

 

be made by the department for causes the department considers

 

expedient. The department shall certify the amount and the state

 

treasurer shall pay that amount out of the proceeds of the tax.

 

     (8) A person liable for the tax may reimburse itself by adding

 

to the price of the tobacco products an amount equal to the tax


 

levied under this act.

 

     (9) A wholesaler, unclassified acquirer, or other person shall

 

not sell or transfer any unaffixed stamps acquired by the

 

wholesaler or unclassified acquirer from the department. A

 

wholesaler or unclassified acquirer who has any unaffixed stamps on

 

hand at the time its license is revoked or expires, or at the time

 

it discontinues the business of selling cigarettes, shall return

 

those stamps to the department. The department shall refund the

 

value of the stamps, less the appropriate discount paid.

 

     (10) If the wholesaler or unclassified acquirer has unsalable

 

packs returned from a retailer, secondary wholesaler, vending

 

machine operator, wholesaler, or unclassified acquirer with stamps

 

affixed, the department shall refund the amount of the tax less the

 

appropriate discount paid. If the wholesaler or unclassified

 

acquirer has unaffixed unsalable stamps, the department shall

 

exchange with the wholesaler or unclassified acquirer new stamps in

 

the same quantity as the unaffixed unsalable stamps. An application

 

for refund of the tax shall be filed on a form prescribed by the

 

department for that purpose, within 4 years from the date the

 

stamps were originally acquired from the department. A wholesaler

 

or unclassified acquirer shall make available for inspection by the

 

department the unused or spoiled stamps and the stamps affixed to

 

unsalable individual packages of cigarettes. The department may, at

 

its own discretion, witness and certify the destruction of the

 

unused or spoiled stamps and unsalable individual packages of

 

cigarettes that are not returnable to the manufacturer. The

 

wholesaler or unclassified acquirer shall provide certification


 

from the manufacturer for any unsalable individual packages of

 

cigarettes that are returned to the manufacturer.

 

     (11) On or before the twentieth of each month, each

 

manufacturer shall file a report with the department listing all

 

sales of tobacco products to wholesalers and unclassified acquirers

 

during the preceding calendar month and any other information the

 

department finds necessary for the administration of this act. This

 

report shall be in the form and manner specified by the department.

 

     (12) Each wholesaler or unclassified acquirer shall submit to

 

the department an unstamped cigarette sales report on or before the

 

twentieth day of each month covering the sale, delivery, or

 

distribution of unstamped cigarettes during the preceding calendar

 

month to points outside of Michigan. A separate schedule shall be

 

filed for each state, country, or province into which shipments are

 

made. For purposes of the report described in this subsection,

 

"unstamped cigarettes" means individual packages of cigarettes that

 

do not bear a Michigan stamp. The department may provide the

 

information contained in this report to a proper officer of another

 

state, country, or province reciprocating in this privilege.

 

     (13) As used in subsection (3):

 

     (a) "Eligible equipment" means a cigarette tax stamping

 

machine that meets all of the following conditions:

 

     (i) Was purchased by a stamping agent who was licensed as a

 

stamping agent as of December 31, 2011.

 

     (ii) Enables the stamping agent to affix digital stamps to

 

individual packages of cigarettes in accordance with the

 

requirements under section 6a(2).


 

     (iii) Was purchased to be used for the primary purpose of

 

permitting the stamping agent to affix digital stamps to individual

 

packages of cigarettes to be sold in this state following the

 

implementation of the use of digital stamps as provided in section

 

5a(2).

 

     (b) "Existing equipment" means a cigarette tax stamping

 

machine that meets all of the following conditions:

 

     (i) Was owned by a person who was licensed as a stamping agent

 

as of December 31, 2011.

 

     (ii) Was a cigarette tax stamping machine used prior to January

 

1, 2012 by the stamping agent to apply stamps using stamp rolls of

 

30,000 stamps.

 

     Sec. 12. (1) The proceeds derived from the payment of taxes,

 

fees, and penalties provided for under this act and the license

 

fees received by the department shall be deposited with the state

 

treasurer and disbursed only as provided in this section and

 

section 7(5). However, before a distribution of funds is made under

 

this section, subject to appropriation, the funds described in this

 

section may be used by the department, the attorney general, and

 

the department of state police for enforcement and administration

 

of this act.

 

     (2) The tax imposed under section 7(1)(a) shall be disbursed

 

as follows:

 

     (a) 94% of the proceeds shall be credited to the state school

 

aid fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (b) 6% of the proceeds shall be credited to the healthy


 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (3) The tax imposed on cigarettes under section 7(1)(b) shall

 

be disbursed as follows:

 

     (a) Beginning May 1, 1994 and through June 30, 2004, 5.3% of

 

the proceeds shall be credited to the health and safety fund

 

created in the health and safety fund act, 1987 PA 264, MCL 141.471

 

to 141.479.

 

     (b) Beginning July 1, 2004, 6.5% of the proceeds shall be

 

credited to the health and safety fund created in the health and

 

safety fund act, 1987 PA 264, MCL 141.471 to 141.479.

 

     (c) Through June 30, 2004, 25.3% of the proceeds shall be

 

credited to the general fund of this state.

 

     (d) Beginning July 1, 2004, 24.1% of the proceeds shall be

 

credited to the general fund of this state.

 

     (e) 63.4% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (f) 6% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the


 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (4) Beginning August 1, 2002, the tax imposed on cigarettes

 

under section 7(1)(c) shall be disbursed as follows:

 

     (a) Through June 30, 2004, 74.2%, and beginning July 1, 2004,

 

9.0% of the proceeds shall be credited to the general fund of this

 

state.

 

     (b) Through June 30, 2004, 4.6%, and beginning July 1, 2004,

 

56.3% of the proceeds shall be credited to the state school aid

 

fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (c) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (d) Through June 30, 2004, 3.0%, and beginning July 1, 2004,

 

3.7% of the proceeds shall be paid to counties with a 2000

 

population of more than 2,000,000, to be used only for indigent

 

health care.

 

     (e) Through June 30, 2004, 12.2%, and beginning July 1, 2004,

 

25.0% of the proceeds shall be credited to the Michigan medicaid

 

benefits trust fund created under section 5 of the Michigan trust

 

fund act, 2000 PA 489, MCL 12.255.

 

     (5) Beginning August 1, 2002, the tax imposed under section


 

7(1)(f) shall be disbursed as follows:

 

     (a) 75.6% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (c) 18.4% of the proceeds shall be credited to the general

 

fund of this state.

 

     (6) Beginning August 1, 2002, the tax imposed on cigarettes

 

under section 7(1)(d) shall be disbursed as follows:

 

     (a) 94.0% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (7) Beginning July 1, 2004, the tax imposed on cigarettes

 

under section 7(1)(e) shall be disbursed as follows:


 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds shall be credited to the Michigan medicaid

 

benefits trust fund created under section 5 of the Michigan trust

 

fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the Michigan medicaid benefits trust fund created under

 

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (8) Beginning July 1, 2004, the tax imposed under section

 

7(1)(g) shall be disbursed as follows:

 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds shall be credited to the Michigan medicaid

 

benefits trust fund created under section 5 of the Michigan trust

 

fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the Michigan medicaid benefits trust fund created under

 

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (9) The proceeds of the fees and penalties provided for

 

described in this act shall be used for the administration of this

 

act.

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