senate Bill S6839

Relates to the tax on certain tobacco products

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 28 / Mar / 2012
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 13 / Jun / 2012
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 13 / Jun / 2012
    • ORDERED TO THIRD READING CAL.1227
  • 21 / Jun / 2012
    • RECOMMITTED TO RULES

Summary

Relates to the imposition of tax on cigars; caps tax at one dollar per cigar.

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Bill Details

Versions:
S6839
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
Tax Law
Laws Affected:
Amd ยงยง471-b, 471-c & 473-a, Tax L

Sponsor Memo

BILL NUMBER:S6839

TITLE OF BILL:
An act
to amend the tax law, in relation to the tax on certain tobacco
products; and providing for the repeal of certain provisions of such law
relating thereto

PURPOSE:
This bill caps the state imposed tax on cigars at 75% of the wholesale
price or $1.00 per cigar, whichever is less.

To remain competitive, and to provide the state with a stream of
revenue it can depend upon, it is only logical to impose a reasonable
tax cap on cigars, allowing the state to continue collecting revenue
and establish ourselves as more competitive to surrounding states in
the cigar market.

SUMMARY OF PROVISIONS:
Amends sections 471-b and 421-c of the tax law to cap the tax on
cigars at 75% of the wholesale price or $1.00 per cigar, whichever is
less.

EXISTING LAW:
Existing law provides for a 75% of wholesale price tax on cigars, with
no maximum as to the dollar amount.

STATEMENT OF SUPPORT:
New York companies that manufacture, distribute and sell cigars are an
important part of the State's economy, providing well-paying jobs,
and paying significant amounts in taxes to the State and local
governments.

In June of 2010, the State increased the excise tax rate on cigars by
63%. This increase was on top of a 2009 increase. Together, these new
taxes have had a negative impact on businesses and workers in New
York State.

Currently, some New York consumers are avoiding the high tax by
purchasing the cigars over the Internet, or from non-taxed sources
such as Native American smoke shops. Some consumers can also go to
neighboring states with lower tax rates including Pennsylvania (which
does not tax cigars) , Connecticut (which levies a 27.5% tax), New
Jersey or Massachusetts (both which levy a 30% tax).

The current tax rate is 75% of the cigar's wholesale price. As such,
the tax on a 25-cent cigar is equal to just under 19 cents, while the
tax on
a handmade cigar could be as high as $11.25 for just one cigar.

By capping the wholesale sale price on cigars at 75% or $1 dollar per
cigar, whichever is less, we can save jobs in New York and prevent
people from crossing borders, using the Internet and purchasing from
non-taxed sources such as Native American smoke shops.

FISCAL IMPLICATIONS:


None.

EFFECTIVE DATE:
This act shall take effect on the first day of the month next
commencing at least 90 days after this act shall have become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6839

                            I N  S E N A T E

                             March 28, 2012
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to the tax on  certain  tobacco
  products;  and  providing for the repeal of certain provisions of such
  law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. The opening paragraph of subdivision 1 of section 471-b of
the tax law, as amended by section 2 of part QQ1 of chapter  57  of  the
laws of 2008, is amended to read as follows:
  There  is  hereby  imposed  and  shall  be  paid  a tax on all tobacco
products [possessed in this state by any person for sale] SOLD,  SHIPPED
OR  DELIVERED  WITHIN THIS STATE BY ANY PERSON, except that no tax shall
be imposed on tobacco products sold under such circumstances  that  this
state is without power to impose such tax, or sold to the United States,
or  sold  to  or by a voluntary unincorporated organization of the armed
forces of the United States operating a place  for  the  sale  of  goods
pursuant  to regulations promulgated by the appropriate executive agency
of the United States, to the extent provided  in  such  regulations  and
policy statements of such an agency applicable to such sales.
  S  2.  Paragraph (a) of subdivision 1 of section 471-b of the tax law,
as amended by section 18 of part D of chapter 134 of the laws  of  2010,
is amended to read as follows:
  (a)  (I)  Such  tax  on  tobacco products other than CIGARS, snuff and
little cigars shall be at the rate of seventy-five percent of the whole-
sale price, and is intended to be imposed only once upon the sale of any
tobacco products other than CIGARS, snuff and little cigars.
  (II) SUCH TAX ON CIGARS SHALL BE AT A RATE OF SEVENTY-FIVE PERCENT  OF
THE  WHOLESALE  PRICE OR ONE DOLLAR PER CIGAR, WHICHEVER IS LESS, AND IS
INTENDED TO BE IMPOSED ONLY ONCE UPON THE SALE OF ANY CIGAR.
  S 3. Paragraphs (i), (ii) and (iii)  of  subdivision  (a)  of  section
471-c  of  the tax law, paragraphs (i) and (ii) as amended by section 20

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14810-02-2

S. 6839                             2

and paragraph (iii) as added by section 21 of part D of chapter  134  of
the laws of 2010, are amended to read as follows:
  (i)  Such  tax on tobacco products other than CIGARS, snuff and little
cigars shall be at the rate of seventy-five  percent  of  the  wholesale
price.
  (ii)  SUCH  TAX ON CIGARS SHALL BE AT THE RATE OF SEVENTY-FIVE PERCENT
OF THE WHOLESALE PRICE OR ONE DOLLAR PER CIGAR, WHICHEVER IS  LESS,  AND
IS INTENDED TO BE IMPOSED ONLY ONCE UPON THE SALE OF ANY CIGAR.
  (III)  Such tax on snuff shall be at the rate of two dollars per ounce
and a proportionate rate on any fractional parts of an  ounce,  provided
that  cans or packages of snuff with a net weight of less than one ounce
shall be taxed at the equivalent rate of cans or packages  weighing  one
ounce.  Such  tax shall be computed based on the net weight as listed by
the manufacturer.
  [(iii)] (IV) Such tax on little cigars  shall  be  at  the  same  rate
imposed  on  cigarettes under this article and is intended to be imposed
only once upon the sale of any little cigars.
  S 4. Subdivision 1 of section 473-a of the tax law, as added by  chap-
ter 61 of the laws of 1989, is amended to read as follows:
  1.  Every  distributor  shall,  on or before the twentieth day of each
month, file with the commissioner of taxation and finance  a  return  on
forms  to  be  prescribed and furnished by the commissioner, showing the
quantity and wholesale price of all tobacco products [imported or caused
to be imported into the state by him or manufactured  in  the  state  by
him],  SOLD,  SHIPPED OR DELIVERED WITHIN THIS STATE BY SUCH DISTRIBUTOR
during the preceding calendar month. Every distributor authorized by the
commissioner to make returns and pay the tax on tobacco  products  sold,
shipped  or  delivered  by  [him]  SUCH DISTRIBUTOR to any person in the
state shall file a return showing the quantity and  wholesale  price  of
all  tobacco products so sold, shipped or delivered during the preceding
calendar month. Provided, however, the commissioner may, if  he  OR  SHE
deems  it  necessary in order to insure the payment of the taxes imposed
by this article, require returns to be made at such times  and  covering
such  periods  as  he OR SHE may deem necessary, and, by regulation, may
permit the filing of returns  on  a  quarterly,  semi-annual  or  annual
basis, or may waive the filing of returns by a distributor for such time
and  upon  such  terms as he OR SHE may deem proper if satisfied that no
tax imposed by this article is or will be payable by [him] SUCH DISTRIB-
UTOR during the time for which returns are waived.  Such  returns  shall
contain such further information as the commissioner may require.
  S 5. The commissioner of taxation and finance, in conjunction with the
director  of  the  division of the budget, shall submit to the governor,
the temporary president of the senate, and the speaker of the  assembly,
an annual report to be submitted in July of each year evaluating the tax
on  tobacco  products. Such report shall include, but not be limited to,
the quantity of all tobacco products,  by  category,  sold,  shipped  or
delivered  in  the state during the preceding fiscal year, the amount of
tax revenue received on tobacco products, by category, as  well  as  the
number  of distributors filing and paying such taxes to the state during
the preceding fiscal year. Such report shall be based on data  available
from  the  returns  filed with the department of taxation and finance as
well as from any final determinations of taxes assessed by  the  depart-
ment. Notwithstanding any provision of law to the contrary, the informa-
tion contained in the report shall be public information. The report may
also include any recommendations for changes in the imposition or admin-
istration  of the tax, and any other recommendation of such commissioner

S. 6839                             3

regarding continuing modification, or repeal of such tax, and such other
information regarding the tax as the commissioner may  feel  useful  and
appropriate.
  S  6.  The commissioner of taxation and finance shall establish proce-
dures to provide for a credit against taxes  paid  by  distributors  for
periods  prior to the effective date of this act to offset the taxes due
on or after the effective date of this act.
  S 7. This act shall take effect on the first day  of  the  month  next
commencing  at least ninety days after this act shall have become a law;
provided that the commissioner of taxation and finance shall be  author-
ized on and after the date this act shall have become a law to adopt and
amend  any  rules  and  regulations  and  issue  any procedure, forms or
instructions necessary to implement the provisions of this  act  on  its
effective  date;  and  provided  further, that sections two and three of
this act shall expire and be deemed repealed December 31, 2017.

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