Bill Text: NJ S3270 | 2020-2021 | Regular Session | Introduced
Bill Title: Limits "tobacco and vapor products tax" on cigars to up to $0.50 per cigar.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2020-12-14 - Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee [S3270 Detail]
Download: New_Jersey-2020-S3270-Introduced.html
Sponsored by:
Senator ANTHONY M. BUCCO
District 25 (Morris and Somerset)
SYNOPSIS
Limits "tobacco and vapor products tax" on cigars to up to $0.50 per cigar.
CURRENT VERSION OF TEXT
As introduced.
An Act limiting the tobacco and vapor products tax on cigars and amending P.L.1990, c.39.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. 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 P.L.1990, c.39 (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 is offered to, or purchased by, consumers without a mouthpiece, tip, or filter for smoking;
"Consumer" means a person except a distributor, manufacturer, or wholesaler who acquires a tobacco product for consumption, storage, or use in this State;
"Container e-liquid" means a container of liquid nicotine or other liquid where the liquid is marketed, sold, or intended for use in an electronic smoking device, but does not include a prefilled cartridge or other container where the cartridge or container is marketed, sold, or intended for use as, or as a part of, an electronic smoking device;
"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 without receiving proof that the tax has been or will 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;
"Electronic smoking device" means a nonlighted, noncombustible device that may be used to simulate smoking and that employs a mechanical heating element, battery, or circuit, regardless of shape or size, to produce aerosolized or vaporized nicotine or other substance for inhalation into the body of a person, including but not limited to a device that is manufactured, distributed, marketed, or sold as an e-cigarette, e-cigar, e-pipe, e-hookah, vape pen, or any other similar product with any other product name or descriptor;
"Liquid nicotine" means any solution containing nicotine that is designed or sold for use with an electronic smoking device;
"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, made, or derived from any tobacco, nicotine, or other chemicals or substances for consumption by a person, including, but not limited to, cigars, little cigars, cigarillos, chewing tobacco, pipe tobacco, smoking tobacco and their substitutes, dry and moist snuff, and liquid nicotine, 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;
"Vapor business" means a retail business where more than 50 percent of its retail sales are derived from electronic smoking devices, related accessories, and liquid nicotine, but does not include a retail business that does not sell container e-liquid;
"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.2019, c.147, s.2)
2. 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%] 30 percent upon the wholesale price upon the sale, use, or distribution of a tobacco product within this State, except that if the product is:
(1) moist snuff, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1); [or]
(2) liquid nicotine, the tax shall be imposed as provided in section 5 of P.L.2018, c.50 (C.54:40B-3.2); or
(3) a cigar, the tax imposed pursuant to this section shall not exceed $0.50 per cigar.
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%] 30 percent measured by the sales price of a similar tobacco product to a distributor, except that if the product is:
(1) moist snuff or liquid nicotine, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1) or section 5 of P.L.2018, c.50 (C.54:40B-3.2), respectively;
(2) a cigar, the tax imposed pursuant to this section shall not exceed $0.50 per 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 of [30%] 30 percent of the price paid or charged for the tobacco product, except that if the product is:
(1) moist snuff or liquid nicotine, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1) or section 5 of P.L.2018, c.50 (C.54:40B-3.2), respectively[,] ; or
(2) a cigar, the tax imposed pursuant to this section shall not exceed $0.50 per 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).
(cf: P.L.2018, c.50, s.4)
3. 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 subsection c. of section 3 of P.L.1990, c.39 (C.54:40B-3) and section 3 of P.L.2006, c.37 (C.54:40B-3.1) 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)
4. This act shall take effect on the first day of the second month after enactment and apply to the sale, use, or distribution of cigars on and after that date.
STATEMENT
This bill limits the taxation of cigars under the Tobacco and Vapor Products Tax Act to a maximum of 50 cents per cigar. Currently, the tax on cigars is 30 percent of the wholesale price. Under this bill, the tax will still be 30 percent of the wholesale price, but the tax will be capped at 50 cents per cigar.
The bill also amends current law to clarify tax payment responsibilities of tobacco product wholesalers and distributors.
Every state imposes some tax on non-cigarette tobacco products. Ten states have adopted a tax cap per cigar. Cigar retailers with establishments in those states have claimed that prior to the establishment of the cap their retail sales prices suffered a serious competitive disadvantage with out-of-state, Internet, and catalog businesses that did not collect state tobacco products tax.
Setting a maximum tax per cigar is proposed to encourage New Jersey consumers to make more of their cigar purchases from New Jersey "brick and mortar" retailers who are often small locally-owned businesses. A 50 cent per cigar tax cap will level the playing field for New Jersey retailers and potentially increase State revenues collected under the tax.
