1.1 	A bill for an act
1.2 	relating to health care; imposing a cigarette health
1.3 	impact fee; establishing a health impact fund;
1.4 	imposing a floor stocks fee; amending Minnesota
1.5 	Statutes 2004, sections 297F.10, subdivision 1;
1.6 	297F.185; 325D.32, subdivision 9; proposing coding for
1.7 	new law in Minnesota Statutes, chapters 16A; 256.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. [16A.725] HEALTH IMPACT FUND AND FUND
1.10 	REIMBURSEMENTS.
1.11 		Subdivision 1.Health impact fund. There is created in
1.12 	the state treasury a health impact fund into which is deposited
1.13 	all revenue from the health impact fee under section 256.9658
1.14 	and any floor stocks fee enacted into law.
1.15 		Subd. 2.Certified tobacco expenditures. By April 30 of
1.16 	each year, the commissioner of human services shall certify to
1.17 	the commissioner of finance the state share, by fund, of smoking
1.18 	attributable costs for the previous fiscal year in Minnesota
1.19 	health care programs, including medical assistance, general
1.20 	assistance medical care, and MinnesotaCare, or other applicable
1.21 	expenditures.
1.22 		Subd. 3.Fund reimbursements. (a) Each fiscal year, the
1.23 	commissioner of finance shall first transfer from the health
1.24 	impact fund to the general fund an amount sufficient to offset
1.25 	the general fund cost of the certified expenditures under
1.26 	subdivision 2 or the balance of the fund, whichever is less.
2.1 	(b) If any funds remain in the health impact fund after the
2.2 	transfer in paragraph (a), the commissioner of finance shall
2.3 	transfer to the health care access fund the amount sufficient to
2.4 	offset the health care access fund cost of the certified
2.5 	expenditures in subdivision 2, or the balance of the fund,
2.6 	whichever is less.
2.7 	
EFFECTIVE DATE. This section is effective July 1, 2005.

2.8 	Sec. 2. [256.9658] CIGARETTE HEALTH IMPACT FEE.
2.9 		Subdivision 1.Purpose. A cigarette health impact fee is
2.10 	imposed on and collected from cigarette distributors to recover
2.11 	for the state health costs related to or caused by smoking and
2.12 	to reduce smoking, particularly by youths.
2.13 		Subd. 2.Definitions. The definitions under section
2.14 	297F.01 apply to this section.
2.15 		Subd. 3.Fee imposed. A fee is imposed upon the sale of
2.16 	cigarettes in this state, upon having cigarettes in possession
2.17 	in this state with intent to sell, upon any person engaged in
2.18 	business as a distributor, and upon the use or storage by
2.19 	consumers of cigarettes.  The fee is imposed at the following
2.20 	rates:
2.21 	(1) on cigarettes weighing not more than three pounds per
2.22 	thousand, 37.5 mills on each cigarette; and 
2.23 	(2) on cigarettes weighing more than three pounds per
2.24 	thousand, 75 mills on each cigarette.
2.25 		Subd. 4.Payment. A distributor must pay the fee at the
2.26 	same time and in the same manner as provided for payment of tax
2.27 	under chapter 297F.
2.28 		Subd. 5.Fee on use of unstamped cigarettes. Any person,
2.29 	other than a distributor, that purchases or possesses cigarettes
2.30 	that have not been stamped and on which the fee imposed under
2.31 	this section has not been paid is liable for the fee under this
2.32 	section on the possession or use of those cigarettes.
2.33 		Subd. 6.Administration. The audit, assessment,
2.34 	interest, appeal, refund, penalty, enforcement, administrative,
2.35 	and collection provisions of chapters 270C and 297F apply to the
2.36 	fee imposed under this section.
3.1 		Subd. 7.Cigarette stamp. (a) The stamp in section
3.2 	297F.08 must be affixed to each package and is prima facie
3.3 	evidence that the fee imposed by this section has been paid.
3.4 	(b) Notwithstanding any other provisions of this section,
3.5 	the fee due on the return is based upon actual stamps purchased
3.6 	during the reporting period.
3.7 		Subd. 8.License revocation. The commissioner of revenue
3.8 	may revoke or suspend the license of a distributor for failure
3.9 	to pay the fee or otherwise comply with the requirements under
3.10 	this section.  The provisions and procedures under section
3.11 	297F.04 apply to a suspension or revocation under this
3.12 	subdivision.
3.13 		Subd. 9.Deposit of revenues. The commissioner of
3.14 	revenue shall deposit the revenues from the fee under this
3.15 	section in the health impact fund.
3.16 	
EFFECTIVE DATE. This section is effective July 1, 2005.

3.17 	Sec. 3. Minnesota Statutes 2004, section 297F.10,
3.18 	subdivision 1, is amended to read:
3.19 		Subdivision 1.Tax and use tax on cigarettes.  Revenue
3.20 	received from cigarette taxes, as well as related penalties,
3.21 	interest, license fees, and miscellaneous sources of revenue
3.22 	shall be deposited by the commissioner in the state treasury and
3.23 	credited as follows:
3.24 	(1) the revenue produced by 3.25 3.8 mills of the tax on
3.25 	cigarettes weighing not more than three pounds a thousand and
3.26 	6.5 7.6 mills of the tax on cigarettes weighing more than three
3.27 	pounds a thousand must be credited to the Academic Health Center
3.28 	special revenue fund hereby created and is annually appropriated
3.29 	to the Board of Regents at the University of Minnesota for
3.30 	Academic Health Center funding at the University of Minnesota;
3.31 	and
3.32 	(2) the revenue produced by 1.25 1.45 mills of the tax on
3.33 	cigarettes weighing not more than three pounds a thousand and
3.34 	2.5 2.9 mills of the tax on cigarettes weighing more than three
3.35 	pounds a thousand must be credited to the medical education and
3.36 	research costs account hereby created in the special revenue
4.1 	fund and is annually appropriated to the commissioner of health
4.2 	for distribution under section 62J.692, subdivision 4; and
4.3 	(3) the balance of the revenues derived from taxes,
4.4 	penalties, and interest (under this chapter) and from license
4.5 	fees and miscellaneous sources of revenue shall be credited to
4.6 	the general fund.
4.7 	
EFFECTIVE DATE. This section is effective for revenue
4.8 	received on or after July 1, 2005.

4.9 	Sec. 4. Minnesota Statutes 2004, section 297F.185, is
4.10 	amended to read:
4.11 	297F.185 REVOCATION OF SALES AND USE TAX PERMITS.
4.12 	(a) If a retailer purchases for resale from an unlicensed
4.13 	seller more than 20,000 cigarettes or $500 or more worth of
4.14 	tobacco products, the commissioner may revoke the person's sales
4.15 	and use tax permit as provided in section 297A.86.
4.16 	(b) The commissioner may revoke a retailer's sales or use
4.17 	permit as provided in section 297A.86 if the retailer, directly
4.18 	or indirectly, purchases for resale cigarettes without the
4.19 	proper stamp affixed.

4.20 	EFFECTIVE DATE. This section is effective for violations
4.21 	occurring on or after July 1, 2005.

4.22 	Sec. 5. Minnesota Statutes 2004, section 325D.32,
4.23 	subdivision 9, is amended to read:
4.24 		Subd. 9.Basic cost of cigarettes.  "Basic cost of
4.25 	cigarettes" means the gross invoice cost of cigarettes to the
4.26 	wholesaler or retailer plus the full face value of any stamps
4.27 	which may be required by any cigarette tax or fee act of this
4.28 	state, unless included by the manufacturer in the list price.
4.29 	
EFFECTIVE DATE. This section is effective July 1, 2005.

4.30 	Sec. 6. FLOOR STOCKS FEE.
 4.31 		Subdivision 1.Cigarettes. A floor stocks cigarette fee
4.32 	is imposed on every person engaged in the business in this state
4.33 	as a distributor, retailer, subjobber, vendor, manufacturer, or
4.34 	manufacturer's representative of cigarettes, on the stamped
4.35 	cigarettes and unaffixed stamps in the person's possession or
4.36 	under the person's control at 12:01 a.m. on July 1, 2005.  The
5.1 	fee is imposed at the following rates:
5.2 	(1) on cigarettes weighing not more than three pounds per
5.3 	thousand, 37.5 mills on each such cigarette; and 
5.4 	(2) on cigarettes weighing more than three pounds per
5.5 	thousand, 75 mills on each such cigarette.
5.6 	Each distributor, on or before July 10, 2005, shall file a
5.7 	return with the commissioner of revenue, in the form the
5.8 	commissioner prescribes, showing the stamped cigarettes and
5.9 	unaffixed stamps on hand at 12:01 a.m. on July 1, 2005, and the
5.10 	amount of fee due on the cigarettes and unaffixed stamps.  Each
5.11 	retailer, subjobber, vendor, manufacturer, or manufacturer's
5.12 	representative, on or before July 10, 2005, shall file a return
5.13 	with the commissioner of revenue, in the form the commissioner
5.14 	prescribes, showing the cigarettes on hand at 12:01 a.m. on July
5.15 	1, 2005, and the amount of fee due on the cigarettes.  The fee
5.16 	imposed by this section is due and payable on or before August
5.17 	7, 2005, and after that date bears interest at the rate of one
5.18 	percent per month.
5.19 		Subd. 2.Audit and enforcement. The fee imposed by this
5.20 	section is subject to the audit, assessment, interest, appeal,
5.21 	refund, penalty, enforcement, administrative, and collection
5.22 	provisions of chapters 270C and 297F.  The commissioner of
5.23 	revenue may require a distributor to receive and maintain copies
5.24 	of floor stocks fee returns filed by all persons requesting a
5.25 	credit for returned cigarettes.
5.26 		Subd. 3.Deposit of proceeds. The commissioner of
5.27 	revenue shall deposit the revenues from the fee under this
5.28 	section in the health impact fund.
5.29 	
EFFECTIVE DATE. This section is effective July 1, 2005.