2015 -- H 5327

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LC000039

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION - CIGARETTE TAX-MINIMUM PRICE OF CIGARETTES

     

     Introduced By: Representatives Phillips, Morin, Casey, Edwards, and Hull

     Date Introduced: February 05, 2015

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-20-12 of the General Laws in Chapter 44-20 entitled "Cigarette

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Tax" is hereby amended to read as follows:

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     44-20-12. Tax imposed on cigarettes sold. -- A tax is imposed on all cigarettes sold or

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held for sale in the state. The payment of the tax to be evidenced by stamps, which may be

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affixed only by licensed distributors to the packages containing such cigarettes. Any cigarettes on

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which the proper amount of tax provided for in this chapter has been paid, payment being

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evidenced by the stamp, is not subject to a further tax under this chapter. The tax is at the rate of

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one hundred seventy-five (175) one hundred fifty (150) mills for each cigarette.

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     SECTION 2. Chapter 44-20 of the General Laws entitled "Cigarette Tax" is hereby

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amended by adding thereto the following section:

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     44-20-12.5. Minimum pricing of cigarettes. -- Notwithstanding any rule, regulation or

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state law to the contrary, a minimum markup of fifteen percent (15%) shall be added to the total

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cost of cigarettes sold by a retailer. The total cost shall include the invoice cost of the

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merchandise to the retailer plus the cigarette excise tax imposed by ยง 44-20-12 plus freight

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charges and cartage cost to the retail outlet if performed or paid for by the retailer. The minimum

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markup of fifteen percent (15%) shall not be deemed to be an unfair sales practice pursuant to

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chapter 13 of title 6. The tax administrator shall promulgate rules and regulations consistent with

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this section.

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     SECTION 3. Section 6-13-1 of the General Laws in Chapter 6-13 entitled "Unfair Sales

 

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Practices" is hereby amended to read as follows:

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     6-13-1. Definitions. -- (a) "Cost to the retailer" means the invoice cost of the

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merchandise to the retailer within thirty (30) days prior to the date of the sale, or the replacement

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cost of the merchandise to the retailer within thirty (30) days prior to the date of the sale, in the

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quantity last purchased, whichever is lower; less all trade discounts except customary discounts

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for cash; to which shall be added:

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      (1) Freight charges not otherwise included in the cost of the merchandise;

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      (2) Cartage to the retail outlet if performed or paid for by the retailer, which cartage cost

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shall be deemed to be three-fourths of one percent (0.75%) of the cost of the merchandise to the

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retailer, unless the retailer claims and proves a lower cartage cost; and

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      (3) A markup to cover in part the cost of doing business, which markup, in the absence

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of proof of a lesser cost, shall be six percent (6%) of the total cost at the retail outlet.

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      (b) "Cost to the wholesaler" means the invoice cost of the merchandise to the wholesaler

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within thirty (30) days prior to the date of the sale, or the replacement cost of the merchandise to

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the wholesaler within thirty (30) days prior to the date of the sale, in the quantity last purchased,

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whichever is lower; less all trade discounts except customary discounts for cash; to which shall be

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added:

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      (1) Freight charges not otherwise included in the cost of the merchandise;

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      (2) Cartage to the retail outlet if performed or paid for by the wholesaler, which cartage

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cost shall be deemed to be three-fourths of one percent (0.75%) of the cost of the merchandise to

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the wholesaler, unless the wholesaler claims and proves a lower cartage cost; and

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      (3) A markup to cover in part the cost of doing business, which markup, in the absence

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of proof of a lesser cost, shall be two percent (2%) of the total cost at the wholesale

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establishment. Provided, for the sales of cigarettes there shall be a minimum markup of fifteen

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percent (15%).

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      (c) Where two (2) or more items are advertised; offered for sale; or sold at a combined

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price; the price of each item shall be determined in the manner stated in subsections (a) and (b).

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      (d) "Sell at retail", "sales at retail", and "retail sale" mean and include any transfer of title

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to tangible personal property for a valuable consideration made in the ordinary course of trade or

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in the usual prosecution of the seller's business to the purchaser for consumption or use other than

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resale or further processing or manufacturing. In this and in the preceding subsection the previous

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terms shall include any transfer of property where title is retained by the seller as security for the

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payment of the purchase price.

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      (e) "Retailer" means and includes every person, co-partnership, corporation, or

 

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association engaged in the business of making sales at retail within this state; provided, that, in

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the case of a retailer engaged in the business of making sales both at retail and at wholesale, the

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term shall be applied only to the retail portion of the business.

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      (f) "Wholesaler" means and includes every person, partnership, corporation, or

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association engaged in the business of making sales at wholesale within this state; provided, that,

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in the case of a wholesaler engaged in the business of making sales both at wholesale and at

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retail, the term shall be applied only to the wholesale portion of the business.

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      (g) Whenever any person, partnership, corporation, or association in the course of doing

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business performs the functions of both wholesaler and retailer without actually being engaged in

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the business of making sales at wholesale, the term "wholesaler" means and includes that function

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of the business of preparation for sale at the retail outlet, and the term "retailer" shall be applied

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only to the retail portion of the business.

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      (h) "Household" means and includes those who dwell under the same roof, house, or

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apartment.

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      (i) "Rebate" means a refund of a portion of the purchase price made to consumer to

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induce purchase of product.

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     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - CIGARETTE TAX-MINIMUM PRICE OF CIGARETTES

***

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     This act would reduce the cigarette tax by fifty cents ($0.50) per pack and require a

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fifteen percent (15%) minimum markup be added to the total cost of cigarettes sold by retailers.

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     This act would take effect upon passage.

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