HF 2790

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2018 05:33pm

A bill for an act
relating to taxation; increasing the cigarette excise tax rate; requiring an annual
inflation adjustment to the cigarette excise tax rate; increasing the premium cigar
tax rate; appropriating money; amending Minnesota Statutes 2016, section 297F.05,
by adding a subdivision; Minnesota Statutes 2017 Supplement, sections 297F.05,
subdivisions 1, 3a, 4a; 297F.10, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2017 Supplement, section 297F.05, subdivision 1, is amended
to read:

Subdivision 1.

Rates; cigarettes.

A tax is imposed upon the sale of cigarettes in this
state, upon having cigarettes in possession in this state with intent to sell, upon any person
engaged in business as a distributor, and upon the use or storage by consumers, at the rate
of deleted text begin 152 deleted text end new text begin 159 new text end mills, or deleted text begin 15.2 deleted text end new text begin 15.9 new text end cents, on each cigarette.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2018.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297F.05, is amended by adding a subdivision to
read:

new text begin Subd. 1b. new text end

new text begin Annual indexing. new text end

new text begin (a) Each year, the commissioner shall adjust the tax rates
under subdivision 1, including any adjustment made in prior years under this subdivision,
by multiplying the mill rates for the current calendar year by an adjustment factor and
rounding the result to the nearest mill. The adjustment factor equals the in-lieu sales tax
rate that applies to the following calendar year divided by the in-lieu sales tax rate for the
current calendar year. For purposes of this subdivision, "in-lieu sales tax rate" means the
tax rate established under section 297F.25, subdivision 1. For purposes of the calculations
under this subdivision to be made in any year in which an increase in the federal or state
excise tax on cigarettes is implemented, the commissioner shall exclude from the calculated
average price for the current year an amount equal to any increase in the state or federal
excise tax rate.
new text end

new text begin (b) The commissioner shall publish the resulting rate by November 1, and the rate applies
to sales made on or after January 1 of the following year.
new text end

new text begin (c) The determination of the commissioner under this subdivision is not a rule and is
not subject to the Administrative Procedure Act under chapter 14, including section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies beginning with rates calculated for calendar year 2019.
new text end

Sec. 3.

Minnesota Statutes 2017 Supplement, section 297F.05, subdivision 3a, is amended
to read:

Subd. 3a.

Rates; premium cigars.

(a) A tax is imposed upon all premium cigars in this
state and upon any person engaged in business as a tobacco product distributor, at the lesser
of:

(1) the rate of 95 percent of the wholesale sales price of the premium cigars; or

(2) deleted text begin $0.50 deleted text end new text begin $3.50 new text end per premium cigar.

(b) The tax imposed under paragraph (a) is imposed at the time the tobacco products
distributor:

(1) brings, or causes to be brought, into this state from outside the state premium cigars
for sale;

(2) makes, manufactures, or fabricates premium cigars in this state for sale in this state;
or

(3) ships or transports premium cigars to retailers in this state, to be sold by those retailers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for cigars brought into the state or​
manufactured in the state on or after July 1, 2018.
new text end

Sec. 4.

Minnesota Statutes 2017 Supplement, section 297F.05, subdivision 4a, is amended
to read:

Subd. 4a.

Use tax; premium cigars.

A tax is imposed upon the use or storage by
consumers of all premium cigars in this state, and upon such consumers, at the lesser of:

(1) the rate of 95 percent of the cost to the consumer of the premium cigars; or

(2) deleted text begin $0.50 deleted text end new text begin $3.50 new text end per premium cigar.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for cigars for which the consumer has​
acquired title to, or possession of, on or after July 1, 2018.
new text end

Sec. 5.

Minnesota Statutes 2017 Supplement, section 297F.10, subdivision 1, is amended
to read:

Subdivision 1.

Tax and use tax on cigarettes new text begin and premium cigars new text end .

new text begin (a) new text end Revenue received
from cigarette taxes, as well as related penalties, interest, license fees, and miscellaneous
sources of revenue shall be deposited by the commissioner in the state treasury and credited
as follows:

(1) $22,250,000 each year must be credited to the Academic Health Center special
revenue fund hereby created and is annually appropriated to the Board of Regents at the
University of Minnesota for Academic Health Center funding at the University of Minnesota;
deleted text begin and
deleted text end

(2) $3,937,000 each year must be credited to the medical education and research costs
account hereby created in the special revenue fund and is annually appropriated to the
commissioner of health for distribution under section 62J.692, subdivision 4; deleted text begin and
deleted text end

new text begin (3) $12,500,000 each year must be credited to the tobacco use prevention account hereby
created in the special revenue fund and is annually appropriated to the commissioner of
health for the purposes in paragraph (c); and
new text end

deleted text begin (3) deleted text end new text begin (4) new text end the balance of the revenues derived from taxes, penalties, and interest deleted text begin ( deleted text end under this
chapter deleted text begin ) deleted text end and from license fees and miscellaneous sources of revenue shall be credited to
the general fund.

new text begin (b) Of the revenue received from the tax on premium cigars, as well as related penalties,
interest, license fees, and miscellaneous sources of revenue, $1,800,000 each year must be
credited to the tobacco use prevention account in the special revenue fund created in
paragraph (a), clause (3), and is annually appropriated to the commissioner of health for
the purposes in paragraph (c). The balance of the revenues derived from taxes, penalties,
and interest under this chapter and from license fees and miscellaneous sources of revenue
shall be credited to the general fund.
new text end

new text begin (c) Money appropriated under paragraphs (a), clause (3); and (b) must be spent for:
new text end

new text begin (1) the duties under section 144.392;
new text end

new text begin (2) distribution under section 144.396;
new text end

new text begin (3) any other purpose related to tobacco use prevention authorized by state law; or
new text end

new text begin (4) smoking cessation services.
new text end

new text begin (d) The commissioner of health may administer or contract for the administration of a
smoking cessation service. For purposes of this paragraph, "smoking cessation services"
includes any statewide service that provides assistance to Minnesotans who are seeking
advice or services to help them quit using tobacco products and any public awareness
activities for that service.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end