House File 284 HOUSE FILE BY RAYHONS AND GREIMANN Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act increasing the taxes on cigarettes and tobacco products. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2494HH 80 4 pf/pj/5 PAG LIN 1 1 Section 1. Section 453A.6, subsection 1, Code 2003, is 1 2 amended to read as follows: 1 3 1. There is imposed, and shall be collected and paid to 1 4 the department, the following taxes on all cigarettes used or 1 5 otherwise disposed of in this state for any purpose 1 6 whatsoever: 1 7 Class A. On cigarettes weighing not more than three pounds 1 8 per thousand,eighteen millssix and eight=tenths cents on 1 9 each such cigarette. 1 10 Class B. On cigarettes weighing more than three pounds per 1 11 thousand,eighteen millssix and eight=tenths cents on each 1 12 such cigarette. 1 13 Sec. 2. Section 453A.43, subsection 1, unnumbered 1 14 paragraph 1, Code 2003, is amended to read as follows: 1 15 A tax is imposed upon all tobacco products in this state 1 16 and upon any person engaged in business as a distributor of 1 17 tobacco products, at the rate oftwenty=twofifty=five percent 1 18 of the wholesale sales price of the tobacco products, except 1 19 little cigars as defined in section 453A.42. Little cigars 1 20 shall be subject to the same rate of tax imposed upon 1 21 cigarettes in section 453A.6, payable at the time and in the 1 22 manner provided in section 453A.6; and stamps shall be affixed 1 23 as provided in division I of this chapter. The tax on tobacco 1 24 products, excluding little cigars, shall be imposed at the 1 25 time the distributor does any of the following: 1 26 Sec. 3. Section 453A.43, subsection 2, unnumbered 1 27 paragraph 1, Code 2003, is amended to read as follows: 1 28 A tax is imposed upon the use or storage by consumers of 1 29 tobacco products in this state, and upon the consumers, at the 1 30 rate oftwenty=twofifty=five percent of the cost of the 1 31 tobacco products. 1 32 EXPLANATION 1 33 This bill increases the tax on cigarettes and tobacco 1 34 products. The bill increases the tax on cigarettes from 1.8 1 35 cents per cigarette to 6.8 cents per cigarette. The bill also 2 1 changes the use of mills in assessing the tax to the use of 2 2 cents. One mill equals one one=thousandth of a cent. The 2 3 effect of the bill, as an example, is to increase the tax on a 2 4 pack of 20 cigarettes from $.36 per pack to $1.36 per pack. 2 5 Additionally, the bill increases the tax on tobacco products 2 6 from 22 percent of the wholesale sales price for distributors 2 7 and 22 percent of the cost of tobacco products for the use or 2 8 storage by consumers of tobacco products to 55 percent of the 2 9 wholesale sales price and of the cost. Fifty=five percent of 2 10 the wholesale sales price and of the cost is roughly 2 11 equivalent to the cigarette tax of $1.36 per pack as a 2 12 percentage of the manufacturer's price. 2 13 LSB 2494HH 80 2 14 pf/pj/5