2015 -- S 0209

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LC000806

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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: Senator Leonidas P. Raptakis

     Date Introduced: February 11, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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

Tax" is hereby amended to read as follows:

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

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

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

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

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

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

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

amended by adding thereto the following section:

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

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

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

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

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

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

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

this section.

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

Practices" is hereby amended to read as follows:

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

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

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

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

for cash; to which shall be added:

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

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

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

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

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

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

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

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

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

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

added:

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

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

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

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

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

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

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

percent (15%).

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

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

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

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

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

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

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

payment of the purchase price.

      (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

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

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

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

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

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

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

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

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

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

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

only to the retail portion of the business.

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

apartment.

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

induce purchase of product.

     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

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

     This act would take effect upon passage.

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