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S.F. No. 144 - Cigarette Tax Modification; State General Levy Base Reduction (As Amended by the A-1)
 
Author: Senator Carla J. Nelson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: February 28, 2013



 

Section 1.  [Levy amount]  Freezes the state general levy at taxes payable 2014 amounts and removes the inflating factor.  Directs the Commissioner of Revenue to reduce the state general levy amount.  The levy is reduced with revenue generated from the cigarette and tobacco tax increases in sections 2 to 4.  Effective July 1, 2013. 

Section 2.  [Rates; cigarettes]  Increases the cigarette tax on cigarettes weighing not more than three pounds per thousand (i.e., a standard 20-cigarette pack) from 48 cents per pack to $1.77 per pack.  Increases the tax for cigarettes weighing more than three pounds per thousand from 96 cents per pack to $3.54 per pack.  Effective July 1, 2013. 

Section 3.  [Rates; tobacco products]  Increases the tobacco products tax from 35 percent of the wholesale sales price to 47.5 percent of the wholesale sales price.  Effective July 1, 2013. 

Section 4.  [Use tax; tobacco products]  Increases the consumer use tax on tobacco products from 35 percent of the wholesale sales price to 47.5 percent of the wholesale sales price.  Effective July 1, 2013. 

Section 5.  [Floor stocks taxes]

Subdivision 1.  Cigarettes.  Imposes a floor stocks tax of $1.29 per standard 20-cigarette pack and $2.58 on higher-weight packs.  The tax is imposed on distributors, retailers, subjobbers, vendors, manufacturers, or manufacturer’s representatives on stamped cigarettes or unaffixed stamps in their possession as of July 1, 2013.  Requires distributors to file a return with the Commissioner of Revenue by July 8, 2013, indicating the stamped cigarettes and unaffixed stamps on hand as of July 1, 2013.  Retailers, subjobbers, vendors, manufacturers, and manufacturer’s representatives must file a return with the commissioner by July 8, 2013, indicating the cigarettes on hand as of July 1, 2013.  The tax owed by all entities is due and payable by August 1, 2013 and bears interest at a one percent per month interest rate. 

Subdivision 2.  Tobacco products.  Imposes a floor stocks tax of 12.5 percent of the wholesale sales price of tobacco products.  The tax is imposed on distributors, retailers, subjobbers, vendors, manufacturers, or manufacturer’s representatives on tobacco products in their possession as of July 1, 2013.  These entities must file a return with the Commissioner of Revenue by July 8, 2013, indicating the tobacco products on hand as of July 1, 2013.  Tax is due and payable by August 1, 2013, and bears interest at a one percent per month interest rate. 

Subdivision 3.  Audit and enforcement.  Provides that the floor stocks taxes are subject to the audit, assessment, and collection provisions applicable to taxes imposed under chapter 297F.  The commissioner may require a distributor to receive and maintain copies of floor stocks tax returns filed by those requesting a credit for returned cigarettes.

Subdivision 4.  Deposit of proceeds.  Requires proceeds from the floor stocks taxes to be deposited in the state treasury and credited as provided in section 297F.10.  Under that section, $3,937,000 is credited to a special revenue fund and appropriated to the Commissioner of Health for medical education and research.  The balance of any proceeds after the special revenue appropriation is credited to the general fund.     

Section 6.  [Estimated collections]  Directs the Commissioner of Revenue to reduce the state general levy by the amount of revenue collections estimated to be generated for a full 12 months of collections.  Any corrections of the collections estimated shall be made in calendar year 2015.  Effective the day following final enactment.

NBP:dv      

 

 
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