House File 215 - Introduced HOUSE FILE BY SCHICKEL, TJEPKES, TOMENGA, RAYHONS, WESSEL=KROESCHELL, SHOULTZ, FOEGE, and WENDT Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act increasing the taxes imposed on cigarettes and tobacco 2 products and providing for appropriation of the increased 3 revenue generated to the medical assistance program and for 4 tobacco control and prevention, and providing an effective 5 date. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 1935YH 81 8 pf/gg/14 PAG LIN 1 1 Section 1. Section 453A.6, subsection 1, Code 2005, 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 a. CLASS A. 1 8 (1) On cigarettes weighing not more than three pounds per 1 9 thousand,eighteen millsone and eight=tenths cents on each 1 10 such cigarette. 1 11 (2) In addition to the tax imposed in subparagraph (1), on 1 12 cigarettes weighing not more than three pounds per thousand, 1 13 five cents on each cigarette. 1 14 b. CLASS B. 1 15 (1) On cigarettes weighing more than three pounds per 1 16 thousand,eighteen millsone and eight=tenths cents on each 1 17 such cigarette. 1 18 (2) In addition to the tax imposed in subparagraph (1), on 1 19 cigarettes weighing more than three pounds per thousand, five 1 20 cents on each cigarette. 1 21 Sec. 2. Section 453A.35, Code 2005, is amended to read as 1 22 follows: 1 23 453A.35 TAX AND FEES PAID TO GENERAL FUND. 1 24 The proceeds derived from the sale of stamps and the 1 25 payment of taxes, fees and penalties provided for under this 1 26 chapter, and the permit fees received from all permits issued 1 27 by the department, with the exception of the proceeds derived 1 28 from payment of taxes pursuant to section 453A.6, subsection 1 29 1, paragraph "a", subparagraph (2); section 453A.6, subsection 1 30 1, paragraph "b", subparagraph (2); section 453A.43, 1 31 subsection 1, paragraph "b"; and section 453A.43, subsection 1 32 2, paragraph "b", shall be credited to the general fund of the 1 33 state. All permit fees provided for in this chapter and 1 34 collected by cities in the issuance of permits granted by the 1 35 cities shall be paid to the treasurer of the city where the 2 1 permit is effective, or to another city officer as designated 2 2 by the council, and credited to the general fund of the city. 2 3 Permit fees so collected by counties shall be paid to the 2 4 county treasurer. 2 5 Sec. 3. NEW SECTION. 453A.35A MEDICAL ASSISTANCE FUND == 2 6 TAX REVENUE DEPOSITED == APPROPRIATION. 2 7 1. There is created in the office of the treasurer of 2 8 state a medical assistance fund. The fund consists of the 2 9 revenues generated from the taxes imposed on cigarettes and 2 10 tobacco products pursuant to section 453A.6, subsection 1, 2 11 paragraph "a", subparagraph (2); section 453A.6, subsection 1, 2 12 paragraph "b", subparagraph (2); section 453A.43, subsection 2 13 1, paragraph "b"; and section 453A.43, subsection 2, paragraph 2 14 "b". Moneys in the fund shall be used only as specified in 2 15 this section and are appropriated for the uses specified. 2 16 Moneys deposited in the fund shall not be transferred, used, 2 17 obligated, appropriated, or otherwise encumbered, except as 2 18 provided in this section. Any unexpended balance in the fund 2 19 and any interest or earnings on investments or time deposits 2 20 of the moneys in the fund at the end of a fiscal year shall be 2 21 deposited in the general fund of the state. 2 22 2. Moneys in the fund are appropriated for the fiscal year 2 23 beginning July 1, 2006, and for each fiscal year thereafter, 2 24 as follows: 2 25 a. To the department of human services, an amount 2 26 necessary, annually, for expenses incurred under the medical 2 27 assistance program. 2 28 b. To the Iowa department of public health, an amount 2 29 necessary, annually, for expenses relating to tobacco control 2 30 and prevention within the state. 2 31 Sec. 4. Section 453A.43, subsections 1 and 2, Code 2005, 2 32 are amended to read as follows: 2 33 1. a. A tax is imposed upon all tobacco products in this 2 34 state and upon any person engaged in business as a distributor 2 35 of tobacco products, at the rate of twenty=two percent of the 3 1 wholesale sales price of the tobacco products, except little 3 2 cigars as defined in section 453A.42. 3 3 b. In addition to the tax imposed under paragraph "a", a 3 4 tax is imposed upon all tobacco products in this state and 3 5 upon any person engaged in business as a distributor of 3 6 tobacco products, at the rate of thirty=three percent of the 3 7 wholesale sales price of the tobacco products, except little 3 8 cigars as defined in section 453A.42. 3 9 c. Little cigars shall be subject to the same rate of tax 3 10 imposed upon cigarettes in section 453A.6, payable at the time 3 11 and in the manner provided in section 453A.6; and stamps shall 3 12 be affixed as provided in division I of this chapter. 3 13 d. Thetaxtaxes on tobacco products, excluding little 3 14 cigars, shall be imposed at the time the distributor does any 3 15 of the following: 3 16a.(1) Brings, or causes to be brought, into this state 3 17 from without the state tobacco products for sale. 3 18b.(2) Makes, manufactures, or fabricates tobacco 3 19 products in this state for sale in this state. 3 20c.(3) Ships or transports tobacco products to retailers 3 21 in this state, to be sold by those retailers. 3 22 2. a. A tax is imposed upon the use or storage by 3 23 consumers of tobacco products in this state, and upon the 3 24 consumers, at the rate of twenty=two percent of the cost of 3 25 the tobacco products. 3 26 b. In addition to the tax imposed in paragraph "a", a tax 3 27 is imposed upon the use or storage by consumers of tobacco 3 28 products in this state, and upon the consumers, at a rate of 3 29 thirty=three percent of the cost of the tobacco products. 3 30 c. Thetaxtaxes imposed by this subsection shall not 3 31 apply if thetaxtaxes imposed by subsection 1 on the tobacco 3 32 productshashave been paid. 3 33 d.This taxThe taxes imposed under this subsection shall 3 34 not apply to the use or storage of tobacco products in 3 35 quantities of: 4 1a.(1) Less than 25 cigars. 4 2b.(2) Less than 10 oz. snuff or snuff powder. 4 3c.(3) Less than 1 lb. smoking or chewing tobacco or 4 4 other tobacco products not specifically mentioned herein, in 4 5 the possession of any one consumer. 4 6 Sec. 5. EFFECTIVE DATE. This Act, being deemed of 4 7 immediate importance, takes effect on the first day of the 4 8 month that begins following enactment. 4 9 EXPLANATION 4 10 This bill relates to an increase in the taxes imposed on 4 11 cigarettes and tobacco products and to the deposit and 4 12 appropriation of the increased revenue generated. 4 13 The bill provides for a tax on cigarettes, in addition to 4 14 the tax of 18 mills (1.8 cents) imposed on each cigarette, of 4 15 5 cents on each cigarette. The effect of the bill is to 4 16 increase the tax on a pack of 20 cigarettes from 36 cents per 4 17 pack to $1.36 per pack. 4 18 The bill also provides for a tax on tobacco products, in 4 19 addition to the 22 percent of the wholesale sales price for 4 20 distributors and 22 percent of the cost of tobacco products 4 21 for the use or storage by consumers of tobacco products, of 33 4 22 percent of the wholesale sales price and the cost. 4 23 The bill provides that the additional revenue generated 4 24 (the 5 cents per cigarette and the 33 percent on tobacco 4 25 products) is to be deposited in the medical assistance fund 4 26 created in the bill. The bill provides that moneys in the 4 27 medical assistance fund are appropriated for the fiscal year 4 28 beginning July 1, 2006, and annually thereafter, to the 4 29 department of human services, an amount necessary, annually, 4 30 for expenses incurred under the medical assistance program and 4 31 to the Iowa department of public health, an amount necessary, 4 32 annually, for expenses relating to tobacco control and 4 33 prevention within the state. 4 34 LSB 1935YH 81 4 35 pf:nh/gg/14