2017 -- S 0206

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LC000464

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO TAXATION - LITTLE CIGAR TAX

     

     Introduced By: Senators Miller, Sosnowski, Crowley, Metts, and Ruggerio

     Date Introduced: February 02, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Legislative intent.

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     The use of tobacco and nicotine products by Rhode Island youth is a serious health and

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addiction problem. Cigarette use has greatly declined among Rhode Island youth, to eight percent

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(8%), but as the National Youth Tobacco Survey reports, in 2014 overall use of tobacco among

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youth rose, exposing dangerous new trends. Clever marketing by the tobacco industry, pushing

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little cigars, hookahs, e-cigarettes, and flavored vaping products, has put millions of young people

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at risk of lifelong lethal nicotine addiction. The general assembly finds that each year, five

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hundred (500) children under the age of eighteen (18) in Rhode Island become daily smokers.

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There are sixteen thousand (16,000) children currently alive in Rhode Island today who will

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ultimately die prematurely from smoking. The department of health reports that while eight

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percent (8%) of Rhode Island high school students currently smoke cigarettes, eleven percent

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(11%) of Rhode Island public high school students currently smoke cigars, cigarillos, or little

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cigars. Rhode Island's annual health care costs due to smoking are $639,604,224.

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     SECTION 2. Section 44-20-13.2 of the General Laws in Chapter 44-20 entitled

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"Cigarette Tax" is hereby amended to read as follows:

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     44-20-13.2. Tax imposed on smokeless tobacco, cigars, and pipe tobacco products.

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     (a) A tax is imposed on all smokeless tobacco, cigars, except little cigars as specified in

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chapter 20.2 of this title, and pipe tobacco products sold or held for sale in the state by any

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person, the payment of the tax to be accomplished according to a mechanism established by the

 

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administrator, division of taxation, department of administration. Any tobacco product on which

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

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a stamp, is not subject to a further tax under this chapter. The tax imposed by this section shall be

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as follows:

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     (1) At the rate of eighty percent (80%) of the wholesale cost of cigars, except little cigars

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as specified in chapter 20.2 of this title, pipe tobacco products and smokeless tobacco other than

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snuff.

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     (2) Notwithstanding the eighty percent (80%) rate in subsection (a) above, in the case of

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cigars, the tax shall not exceed fifty cents ($.50) for each cigar.

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     (3) At the rate of one dollar ($1.00) per ounce of snuff, and a proportionate tax at the like

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rate on all fractional parts of an ounce thereof. Such tax shall be computed based on the net

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weight as listed by the manufacturer, provided, however, that any product listed by the

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manufacturer as having a net weight of less than 1.2 ounces shall be taxed as if the product has a

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net weight of 1.2 ounces.

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     (b) Any dealer having in his or her possession any tobacco, cigars, and pipe tobacco

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products with respect to the storage or use of which a tax is imposed by this section shall, within

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five (5) days after coming into possession of the tobacco, cigars, and pipe tobacco in this state,

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file a return with the tax administrator in a form prescribed by the tax administrator. The return

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shall be accompanied by a payment of the amount of the tax shown on the form to be due.

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Records required under this section shall be preserved on the premises described in the relevant

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license in such a manner as to ensure permanency and accessibility for inspection at reasonable

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hours by authorized personnel of the administrator.

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     (c) The proceeds collected are paid into the general fund.

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     SECTION 3. Sections 44-20.2-1 and 44-20.2-2 of the General Laws in Chapter 44-20.2

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entitled "Little Cigar Tax" are hereby amended to read as follows:

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     44-20.2-1. Definitions.

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     Whenever used in this chapter, unless the context requires otherwise:

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     (1) "Administrator" means the tax administrator;

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     (2) "Dealer" means any person whether located within or outside of this state, who sells

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or distributes little cigars to a consumer in this state;

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     (3) "Distributor" means any person:

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     (i) Whether located within or outside of this state, other than a dealer, who sells or

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distributes little cigars within or into this state. Such term shall not include any little cigar

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manufacturer, export warehouse proprietor, or importer with a valid permit under 26 U.S.C. §

 

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5712, if such person sells or distributes little cigars in this state only to licensed distributors, or to

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an export warehouse proprietor or another manufacturer with a valid permit under 26 U.S.C. §

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5712;

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     (ii) Selling little cigars directly to consumers in this state by means of at least twenty-five

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(25) little cigar vending machines.

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     (4) "Importer" means any person who imports into the United States, either directly or

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indirectly, a finished little cigar for sale or distribution;

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     (5) "Licensed" when used with reference to a manufacturer, importer, distributor or

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dealer, means only those persons who hold a valid and current license issued under § 44-20-2 for

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the type of business being engaged in. When the term "licensed" is used before a list of entities,

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such as "licensed manufacturer, importer, wholesale dealer, or retailer dealer," such term shall be

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deemed to apply to each entity in such list;

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     (6) "Little cigars" means and includes any roll, made wholly or in part of tobacco,

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irrespective of size or shape and irrespective of whether the tobacco is flavored, adulterated or

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mixed with any other ingredient, where such roll has a wrapper or cover made of tobacco

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wrapped in leaf tobacco or any substance containing tobacco paper or any other material and

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where such roll has an integrated filter, except where such wrapper is wholly or in greater part

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made of tobacco and where such roll has an integrated filter and weighs over four (4) four and

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one-half (4.5) pounds per thousand (1,000);

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     (7) "Manufacturer" means any person who manufactures, fabricates, assembles,

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processes, or labels a finished little cigar;

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     (8) "Person" means any individual, firm, fiduciary, partnership, corporation, trust, or

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association, however formed;

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     (9) "Place of business" means and includes any place where little cigars are sold or where

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little cigars are stored or kept for the purpose of sale or consumption, including any vessel,

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vehicle, airplane, train, or vending machine;

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     (10) "Sale" or "Sell" includes and applies to gifts, exchanges, and barter;

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     (11) "Snuff" means any finely cut, ground, or powdered tobacco that is not intended to be

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smoked;

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     (12) "Stamp" means the impression, device, stamp, label, or print manufactured, printed,

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or made as prescribed by the administrator to be affixed to packages of little cigars, as evidence

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of the payment of the tax provided by this chapter or to indicate that the little cigars are intended

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for a sale or distribution in this state that is exempt from state tax under the provisions of state

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law and also includes impressions made by metering machines authorized to be used under the

 

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provisions of this chapter.

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     44-20.2-2. Tax imposed on little cigars sold.

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     (a) The tax imposed on little cigars shall be imposed in the same manner as the tax on

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cigarettes in §44-20-12 and shall otherwise be imposed in accordance with the provisions of §§

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44-20-2 -- 44-20-55.

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     (b) All little cigars shall be sold in packs of twenty (20) or more.

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     (c) Twenty-five percent (25%) of the tax revenue generated from the tax imposed on little

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cigars shall be applied towards smoking cessation programs and services administered by the

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tobacco control program at the department of health.

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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 - LITTLE CIGAR TAX

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     This act would require that the tax imposed on little cigars be imposed in the same

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manner as the tax imposed on cigarettes, that 25% of such revenue, would be applied to smoking

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cessation programs, and would provide that little cigars be sold in packs of twenty (20) or more.

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     This act would take effect upon passage.

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