1.1 	A bill for an act
1.2 	relating to taxation; increasing the cigarette and tobacco products taxes; repealing 
1.3 	the health impact fund and fee; transferring money;amending Minnesota Statutes 
1.4 	2004, section 297F.05, subdivisions 1, 3; Minnesota Statutes 2005 Supplement, 
1.5 	section 325D.32, subdivision 9;  Laws 2005, First Special Session chapter 4, 
1.6 	article 4, section 5; repealing Minnesota Statutes 2005 Supplement, sections 
1.7 	16A.725; 256.9658.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 297F.05, subdivision 1, is amended to read:
1.10 		Subdivision 1.Rates; cigarettes. A tax is imposed upon the sale of cigarettes in 
1.11 	this state, upon having cigarettes in possession in this state with intent to sell, upon any 
1.12 	person engaged in business as a distributor, and upon the use or storage by consumers, at 
1.13 	the following rates:
1.14 	(1) on cigarettes weighing not more than three pounds per thousand, 24 61.5 mills 
1.15 	on each such cigarette; and
1.16 	(2) on cigarettes weighing more than three pounds per thousand, 48123 mills on 
1.17 	each such cigarette.

1.18 	EFFECTIVE DATE. This section is effective August 1, 2005, but the tax increase 
1.19 	imposed by this section is a replacement for the fee enacted in Laws 2005, First Special 
1.20 	Session chapter 4, article 4, section 2, and any amounts paid under the fee are credited 
1.21 	against the liability for the tax under this section. The credit does not apply to any 
1.22 	amount of the fee refunded or returned, whether to the manufacturer, distributor, retailer, 
1.23 	consumer, or anyone else.

1.24 	Sec. 2. Minnesota Statutes 2004, section 297F.05, subdivision 3, is amended to read:
2.1 		Subd. 3.Rates; tobacco products. A tax is imposed upon all tobacco products in 
2.2 	this state and upon any person engaged in business as a distributor, at the rate of 3570 
2.3 	percent of the wholesale sales price of the tobacco products. The tax is imposed at the 
2.4 	time the distributor:
2.5 	(1) brings, or causes to be brought, into this state from outside the state tobacco 
2.6 	products for sale;
2.7 	(2) makes, manufactures, or fabricates tobacco products in this state for sale in 
2.8 	this state; or
2.9 	(3) ships or transports tobacco products to retailers in this state, to be sold by those 
2.10 	retailers.

2.11 	EFFECTIVE DATE. This section is effective August 1, 2005, but the tax increase 
2.12 	imposed by this section is a replacement for the fee enacted in Laws 2005, First Special 
2.13 	Session chapter 4, article 4, section 2, and any amounts paid under the fee are credited 
2.14 	against the liability for the tax under this section. The credit does not apply to any 
2.15 	amount of the fee refunded or returned, whether to the manufacturer, distributor, retailer, 
2.16 	consumer, or anyone else.

2.17 	Sec. 3. Minnesota Statutes 2005 Supplement, section 325D.32, subdivision 9, is 
2.18 	amended to read:
2.19 		Subd. 9.Basic cost of cigarettes. "Basic cost of cigarettes" means the gross invoice 
2.20 	cost of cigarettes to the wholesaler or retailer plus the full face value of any stamps 
2.21 	which may be required by any cigarette tax or fee act of this state, unless included by 
2.22 	the manufacturer in the list price.

2.23 	EFFECTIVE DATE. This section is effective retroactively from August 1, 2005, 
2.24 	and is intended to reflect the replacement of the fee under Laws 2005, First Special Session 
2.25 	chapter 4, article 4, section 2, with the taxes imposed by sections 1 and 2.

2.26 	Sec. 4. Laws 2005, First Special Session chapter 4, article 4, section 5, is amended to 
2.27 	read:
2.28 	Sec. 5.  FLOOR STOCKS FEE TAX.
2.29 	
2.30 		Subdivision 1. Cigarettes. A floor stocks cigarette feetax is imposed on every 
2.31 	person engaged in the business in this state  as a distributor, retailer, subjobber, vendor, 
2.32 	manufacturer, or  manufacturer's representative of cigarettes, on the stamped  cigarettes and 
3.1 	unaffixed stamps in the person's possession or  under the person's control at 12:01 a.m. on 
3.2 	August 1, 2005.  The  feetax is imposed at the following rates:  
3.3 	(1) on cigarettes weighing not more than three pounds per  thousand, 37.5 mills on 
3.4 	each cigarette; and  
3.5 	(2) on cigarettes weighing more than three pounds per  thousand, 75 mills on each 
3.6 	cigarette.  
3.7 	Each distributor, on or before August 10, 2005, shall file  a return with the 
3.8 	commissioner of revenue, in the form the  commissioner prescribes, showing the stamped 
3.9 	cigarettes and  un3affixed stamps on hand at 12:01 a.m. on August 1, 2005, and  the amount 
3.10 	of feetax due on the cigarettes and unaffixed stamps.  Each retailer, subjobber, vendor, 
3.11 	manufacturer, or  manufacturer's representative, on or before August 10, 2005,  shall file 
3.12 	a return with the commissioner of revenue, in the  form the commissioner prescribes, 
3.13 	showing the cigarettes on hand  at 12:01 a.m. on August 1, 2005, and the amount of feetax 
3.14 	due on  the cigarettes.  The feetax imposed by this section is due and  payable on or before 
3.15 	September 7, 2005, and after that date  bears interest at the rate of one percent per month.  
3.16 	
3.17 	
3.18 		Subd. 2.Audit and enforcement.  The feetax imposed by this  section is subject to 
3.19 	the audit, assessment, interest, appeal,  refund, penalty, enforcement, administrative, and 
3.20 	collection  provisions of Minnesota Statutes, chapters 270C and 297F.  The  commissioner 
3.21 	of revenue may require a distributor to receive and  maintain copies of floor stocks feetax 
3.22 	returns filed by all persons  requesting a credit for returned cigarettes.  
3.23 	
3.24 	
3.25 		Subd. 3.Deposit of proceeds. The commissioner of  revenue shall deposit the 
3.26 	revenues from the feetax under this  section in the state treasury and credit them to the 
3.27 	health  impactgeneral fund.  
3.28 	

3.29 	EFFECTIVE DATE. This section is effective retroactively from August 1, 2005, 
3.30 	but the tax in this section is a replacement for and not in addition to the fee enacted in 
3.31 	Laws 2005, First Special Session chapter 4, article 4, section 5.

3.32 	Sec. 5. HEALTH IMPACT FUND TRANSFER.
 3.33 	The commissioner of finance shall transfer any amounts in the health impact fund 
3.34 	to the general fund on the day following final enactment.

4.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

4.2 	Sec. 6.  REPEALER.
 4.3 	Minnesota Statutes 2005 Supplement, sections 16A.725; and 256.9658, are repealed.

4.4 	EFFECTIVE DATE. This section is effective retroactive to August 1, 2005, and 
4.5 	the repealed fee is replaced by the taxes under sections 1 and 2; any amounts paid under 
4.6 	the fee are credited against the liability for the taxes.