Bill Text: NJ A4670 | 2018-2019 | Regular Session | Introduced


Bill Title: Imposes minimum price and tax on cigars.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2018-10-22 - Introduced, Referred to Assembly Health and Senior Services Committee [A4670 Detail]

Download: New_Jersey-2018-A4670-Introduced.html

ASSEMBLY, No. 4670

STATE OF NEW JERSEY

218th LEGISLATURE

 

INTRODUCED OCTOBER 22, 2018

 


 

Sponsored by:

Assemblyman  HERB CONAWAY, JR.

District 7 (Burlington)

 

 

 

 

SYNOPSIS

     Imposes minimum price and tax on cigars.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act imposing a minimum price and tax on cigars, supplementing P.L.1952, c.247 (C.56:7-18 et seq.), and supplementing and amending P.L.1990, c.39.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.  (New section) a.  As used in this section:

     "Cigar" means any roll of tobacco for smoking that is wrapped in leaf tobacco, or any other substance or material containing tobacco, and offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking.  A cigar shall not include a little cigar as defined in this section.

     "Consumer" means a person except a distributor, manufacturer, or wholesaler who acquires a cigar for consumption, storage, or use in this State.

     "Director" means the Director of the Division of Taxation in the Department of the Treasury.

     "Distributor" means

     (1) a person engaged in the business of selling cigars in this State who brings, or causes to be brought into this State from without the State, a cigar for sale within this State;

     (2) a person who makes or manufactures cigars in this State for sale in the State;

     (3) a person engaged in the business of selling cigars without this State who ships or transports cigars to a person in this State to be sold to a retail dealer; or

     (4) a person who receives cigars on which the tax established pursuant to section 2 of P.L.    , c.   (C.    ) (pending before the Legislature as this bill) has not or will not be paid by another distributor.

     "Little cigar" means any roll of tobacco for smoking that: is wrapped in leaf tobacco, or any other substance or material containing tobacco; is offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking; and, weighs not more than three pounds per 1,000 units.  A little cigar shall not include a cigar as defined in this section.

     "Manufacturer" means a person, wherever resident or located, who manufactures or produces, or causes to be manufactured or produced, a cigar and sells, uses, stores, or distributes the product regardless of whether it is intended for sale, use, or distribution within or without this State.

     "Minimum price" means $8.00, excluding all applicable taxes, for a cigar sold individually or, in the case of a package of cigars, the sum of $6.25 plus the product of multiplying the number of cigars in the package by $1.75, excluding all applicable taxes.

     "Package of cigars" means more than one cigar sold in the package, box, or other container provided by the manufacturer or distributor.

     "Retail dealer" means a person who is engaged in this State in the business of selling any cigar at retail.

     "Wholesaler" means a person, wherever resident or located, other than a distributor as defined herein, who:

     (1)   purchases cigars from any other person who purchases from the manufacturer and who acquires cigars solely for the purpose of bona fide resale to retail dealers or to other persons for the purposes of resale only; or

     (2)   services retail outlets by the maintenance of an established place of business for the purchase of cigars including, but not limited to, the maintenance of warehousing facilities for the storage and distribution of cigars.

     b.  It shall be unlawful and a violation of this section for any person to:

     (1)   advertise, offer to sell, or sell, at retail or wholesale, a cigar or package of cigars at less than the minimum price;

     (2)   induce or attempt to induce or to procure or attempt to procure a cigar or package of cigars at less than the minimum price;

     (3)   offer or give or to induce or procure a rebate in price or a concession of any kind that would result in the sale of a cigar or package of cigars at less than the minimum price.

     c.     In all advertisements, offers for sale, or sales involving two or more items, at least one of which is a cigar or package of cigars, at a combined price, and in all advertisements, offers for sale, or sales involving the giving of any gift or concession, the combined selling price shall not be below the total cost to the seller of all articles, products, commodities, gifts, and concessions included in the transaction.  In calculating the combined selling price, the cost of any cigar or package of cigars included in the transaction shall be at or above the minimum price.

     d.    (1)  The director shall assess a penalty for a violation of this section in an amount of not less than $250 for the first violation, not less than $500 for the second violation, and $1,000 for the third and each subsequent violation.  The proceedings shall be summary and in accordance with the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.), before the Superior Court or the municipal court having jurisdiction.  Process shall be in the nature of a summons or warrant and shall issue only at the suit of the director as plaintiff.

     (2)  The director or a person injured by a violation or threatened violation of this section may maintain an action in Superior Court to prevent, restrain, or enjoin a violation or threatened violation of any of the provisions of this section.  If a violation or threatened violation of this section is established, the court shall enjoin, restrain, or otherwise prohibit the violation or threatened violation.  In the event that no injunctive relief is sought or required, a person injured by a violation of this section may maintain an action for damages and costs of suit in the Superior Court.

     e.  The director shall promulgate rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to carry out the purposes of this section.

 

     2.  (New section) a.  There is imposed a tax upon the sale, use, or distribution of a cigar within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $0.80 for each cigar and for a package of cigars, $0.80 for the first cigar, plus $0.175 for each additional cigar.

     b.    Unless a cigar has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a cigar within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $0.80 for each cigar and for a package of cigars, $0.80 for the first cigar, plus $0.175 for each additional cigar.

     c.     Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $0.80 for each cigar and for a package of cigars, $0.80 for the first cigar, plus $0.175 for each additional cigar, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).

     d.  The consumer shall be given an invoice, receipt, or other statement or memorandum stating the  amount of the tax imposed pursuant to this section.

 

     3.    Section 2 of P.L.1990, c.39 (C.54:40B-2) is amended to read as follows:

     2.    As used in [sections 2 through 14 and section 20 of this act] this chapter (C.54:40B-1 et seq.):

     "Cigar" means any roll of tobacco for smoking that is wrapped in leaf tobacco, or any other substance or material containing tobacco, and offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking.  A cigar shall not include a little cigar as defined in this section;

     "Consumer" means a person except a distributor, manufacturer or wholesaler who acquires a tobacco product for consumption, storage or use in this State;

     "Director" means the Director of the Division of Taxation in the Department of the Treasury;

     "Distributor" means

     a person engaged in the business of selling tobacco products in this State who brings, or causes to be brought into this State from without the State a tobacco product for sale within this State,

     a person who makes or manufactures tobacco products in this State for sale in the State,

     a person engaged in the business of selling tobacco products without this State who ships or transports tobacco products to a person in this State to be sold to a retail dealer, or

     a person who receives tobacco products on which the tax has not or will not be paid by another distributor;

     "Dry snuff" means any finely cut, ground or powdered smokeless tobacco that is intended to be sniffed through the nasal cavity, but does not include moist snuff;

     "Little cigar" means any roll of tobacco for smoking that: is wrapped in leaf tobacco, or any other substance or material containing tobacco; is offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking; and, weighs not more than three pounds per 1,000 units.  A little cigar shall not include a cigar as defined in this section;

     "Manufacturer" means a person, wherever resident or located, who manufactures or produces, or causes to be manufactured or produced, a tobacco product and sells, uses, stores or distributes the product regardless of whether it is intended for sale, use or distribution within or without this State;

     "Moist snuff" means any finely cut, ground or powdered smokeless tobacco that is intended to be placed or dipped in the oral cavity, but does not include dry snuff;

     "Person" means an individual, firm, corporation, copartnership, joint venture, association, receiver, trustee, guardian, executor, administrator, or any other person acting in a fiduciary capacity, or an estate, trust or group or combination acting as a unit, the State Government and any political subdivision thereof, and the plural as well as the singular, unless the intention to give a more limited meaning is disclosed by the context;

     "Place of business" means a place where a tobacco product is sold or where a tobacco product is brought or kept for the purpose of sale or consumption, including so far as may be applicable a vessel, vehicle, airplane, train or vending machine;

     "Retail dealer" means a person who is engaged in this State in the business of selling any tobacco product at retail.  A person placing a tobacco product vending machine at, or on any premises shall be deemed to be a retail dealer for each vending machine;

     "Sale" means any sale, transfer, exchange, barter, or gift, in any manner or by any means whatsoever;

     "Tobacco product" means any product containing any tobacco for personal consumption including, but not limited to, cigars, little cigars, cigarillos, chewing tobacco, pipe tobacco, smoking tobacco and their substitutes, and dry and moist snuff, but does not include cigarette as defined in section 102 of the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.);

     "Treasurer" means the State Treasurer;

     "Use" means the exercise of any right or power incidental to the ownership of a tobacco product, including a sale at retail;

     "Wholesale price" means the actual price for which a manufacturer sells tobacco products to a distributor; and

     "Wholesaler" means a person, wherever resident or located, other than a distributor as defined herein, who:

     a.     purchases tobacco products from any other person who purchases from the manufacturer and who acquires tobacco products solely for the purpose of bona fide resale to retail dealers or to other persons for the purposes of resale only; or

     b.    services retail outlets by the maintenance of an established place of business for the purchase of tobacco products including, but not limited to, the maintenance of warehousing facilities for the storage and distribution of tobacco products.

(cf: P.L.2006, c.37, s.4)

 

     4.    Section 3 of P.L.1990, c.39 (C.54:40B-3) is amended to read as follows:

     3.  a.  There is imposed a tax of 30% upon the wholesale price upon the sale, use, or distribution of a tobacco product within this State, except that if the product is moist snuff or a cigar, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1) and section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), respectively.

     b.    Unless a tobacco product has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a tobacco product within this State, there is imposed upon the distributor or wholesaler a compensating use tax of 30% measured by the sales price of a similar tobacco product to a distributor, except that if the product is moist snuff or a cigar, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1) and section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), respectively.

     c.     Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax of 30% of the price paid or charged for the tobacco product, except that if the product is moist snuff or a cigar, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1) and section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), respectively, which shall be collected in the manner provided in subsection b. of section 5 of this act.

(cf: P.L.2006, c.37, s.5)

 

     5.    Section 5 of P.L.1990, c.39 (C.54:40B-5) is amended to read as follows:

     5. a.  Every distributor or wholesaler required to pay the tax imposed by this act shall be personally liable for the tax imposed under this act.

     b.    If a distributor or wholesaler fails to pay the tax imposed by this act when required to pay the same, then in addition to all other rights, obligations, and remedies provided, the compensating use tax imposed in either subsection c. of section 3 of P.L.1990, c.39 (C.54:40B-3), subsection c. of section 3 of P.L.2006, c.37 (C.54:40B-3.1), or subsection c. of section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), as the case may be, shall be payable by the retail dealer or consumer directly to the director, and it shall be the duty of the retail dealer or consumer to file a return, on a form prescribed by the director, with the director and to pay the tax to the director within 20 days of the date the tax was required to be paid or at other times as specified by the director.

(cf: P.L.2001, c.448, s.4)

 

     6.    Section 7 of P.L.1990, c.39 (C.54:40B-7) is amended to read as follows:

     7.    Every distributor or wholesaler required to pay any tax imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or section 2 of P.L.     , c.    (C.        ) (pending before the Legislature as this bill) shall keep records of every charge for and of all amounts of wholesale price paid or due thereon and of each sale, use, or distribution of a tobacco product by the distributor or wholesaler and of the tax payable thereon, in such form as the director may require.  Records shall include a true copy of each invoice, receipt, statement or memorandum upon which the provisions of section 4 of [this act] P.L.1990, c.39 (C.54:40B-4) require that the tax paid be stated.  Records shall be available for inspection and examination at any time upon demand by the director or duly authorized agent or employee and shall be preserved for a period of three years, except that the director may consent to their destruction within that period or may require that they be kept longer.

(cf:  P.L.2001, c.448, s.6)

 

     7.    Section 1 of P.L.2011, c.80 (C.54:40-13.1) is amended to read as follows:

     1.  a.  All tobacco products subject to the tax imposed under P.L.1990, c.39 (C.54:40B-1 et seq.) or section 2 of P.L.   , c.   (C.     ) (pending before the Legislature as this bill), on which the tax has not been paid as required by section 4 or section 5 of P.L.1990, c.39 (C.54:40B-4 and 54:40B-5), found in any place in this State are declared to be prima facie contraband goods and may be seized by the director, the director's agents or employees, or by any peace officer of this State, when so ordered by the director, without a warrant.

     b.    The director may order the return of any seized tobacco product when the director shall have reason to believe, upon the presentation of satisfactory proof, that the owner has not willfully or intentionally evaded any tax imposed by P.L.1990, c.39 (C.54:40B-1 et seq.) or section 2 of P.L.   , c.   (C.     ) (pending before the Legislature as this bill).  Any tobacco product seized under the provisions of this section shall be disposed of according to law.

     c.  (1) Except as otherwise provided in this section, the director shall destroy any seized untaxed tobacco product not subject to other disposition pursuant to P.L.1990, c.39 (C.54:40B-1 et seq.).

     (2)   As an alternative to destruction, the director may resell any untaxed tobacco product to the manufacturer of that tobacco product, but such tobacco product shall be resold only for export or destruction.

     (3)   Notwithstanding the provisions of paragraph (1) of this subsection, the director may authorize the use for law enforcement purposes of any untaxed tobacco products forfeited in accordance with this section.

     d.    The seizure and sale of any untaxed tobacco product under the provisions of this section shall not relieve any person from a fine, imprisonment or other penalty for violation of any of the provisions of P.L.1990, c.39 (C.54:40B-1 et seq.) or P.L.   , c.   (C.     ) (pending before the Legislature as this bill).  The director, the director's agents or employees, and any peace officer of this State, when so ordered, shall not in any way be responsible in any court for the seizure or the confiscation of any untaxed tobacco product.

(cf:  P.L.2011, c.80, s.1)

 

     8.    (New section)  a.  Notwithstanding the provisions of section 8 of P.L.1990, c.39 (C.54:40B-8) to the contrary, each distributor and wholesaler under P.L.1990, c.39 (C.54:40B-1 et seq.), shall take a physical inventory of all cigars and packages of cigars in the possession of the distributor or wholesaler in this State at 12:01 a.m. on the date of enactment of P.L.     , c.   (pending before the Legislature as this bill).  Each distributor and wholesaler shall file a return, under oath or certified under the penalties of perjury, with the director in a form prescribed by the director.  The return shall show the number of cigars or packages of cigars in the possession of the distributor or wholesaler in the State at 12:01 a.m. on the date of enactment of P.L.     , c.   (pending before the Legislature as this bill).  A distributor or wholesaler shall at the time of filing the return pay to the director the tax imposed pursuant to section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), less the amount of tax already paid by the distributor or wholesaler pursuant to section 3 of P.L.1990, c.39 (C.54:40B-3), as reflected on that return.

     Failure to obtain those forms shall not be an excuse for the failure to make a return containing the information required by the director.

     b.    Each retail dealer shall take a physical inventory of all cigars and packages of cigars in the dealer's possession in this State at 12:01 a.m. on the date of enactment of P.L.     , c.   (pending before the Legislature as this bill).  A retail dealer shall file a return, under oath or certified under the penalties of perjury, with the director in a form prescribed by the director.  The return shall show the number of cigars and packages of cigars in the dealer's possession in this State at 12:01 a.m. on the date of enactment of P.L.     , c.   (pending before the Legislature as this bill).  A retail dealer shall at the time of filing the return pay to the director the tax imposed pursuant to section 2 of P.L.    , c.   (C.       ) (pending before the Legislature as this bill), less the amount of tax already paid by the retail dealer pursuant to section 3 of P.L.1990, c.39 (C.54:40B-3), as reflected on that return.

     Failure to obtain those forms shall not be an excuse for the failure to make a return containing the information required by the director.

 

     9.  This act shall take effect on the first day of the second month beginning after the date of enactment, and shall apply to cigars sold or otherwise disposed of on and after that date, except for those cigars for which the tax was paid prior to the effective date of this act, except that sections 8 and 9 of this act shall take effect immediately.

 

 

STATEMENT

 

     This bill establishes a minimum price and specific per unit rates of tax for cigars.  The bill prohibits the sale of individual cigars to a consumer for less than $8.00, excluding all applicable taxes.  The minimum price for which a person may sell a package of cigars to a consumer is computed by multiplying the number of cigars in the package by $1.75 and adding $6.25 to the package, excluding all applicable taxes. 

     The bill establishes penalties for selling cigars and packages of cigars for less than the minimum price.  Under the bill, the Director of the Division of Taxation may fine a person not less than $250 for the first violation, not less than $500 for the second violation, and $1,000 for the third and each subsequent violation.

     Under the bill, cigars will be subject to the tobacco products wholesale sales and use tax at a rate of $0.80 for each cigar.  A package of cigars will be subject to a tax at the rate of $0.80 for the first cigar, plus $0.175 for each additional cigar.  The bill requires that the consumer be given an invoice, receipt, or other statement or memorandum stating the amount of the tax imposed on cigars and packages of cigars under the bill.

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