1.1                          A bill for an act
  1.2             relating to health; increasing the tax on tobacco 
  1.3             products; reducing the MinnesotaCare tax on health 
  1.4             care providers; eliminating the Minnesota 
  1.5             Comprehensive Health Association assessment; 
  1.6             appropriating money; amending Minnesota Statutes 2002, 
  1.7             sections 295.52, subdivisions 1, 1a, 2, 3; 297F.05, 
  1.8             subdivisions 3, 4; Minnesota Statutes 2003 Supplement, 
  1.9             sections 297F.05, subdivision 1; 297F.10, subdivision 
  1.10            1; proposing coding for new law in Minnesota Statutes, 
  1.11            chapter 62E. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [62E.56] [MINNESOTA COMPREHENSIVE HEALTH 
  1.14  ASSOCIATION; APPROPRIATION FROM TOBACCO TAX PROCEEDS.] 
  1.15     The tax revenue resulting from the increase in the tax on 
  1.16  cigarettes and other tobacco products in this act is annually 
  1.17  appropriated from the general fund to the commissioner of 
  1.18  commerce, to be disbursed to the Minnesota Comprehensive Health 
  1.19  Association for the purpose of eliminating or reducing the 
  1.20  association's need to assess its members.  If the amount of the 
  1.21  appropriation in a fiscal year exceeds the amount necessary in 
  1.22  that fiscal year for the association to avoid assessing its 
  1.23  members, the association may retain the excess for the purpose 
  1.24  of eliminating or reducing member assessments in the next fiscal 
  1.25  year. 
  1.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.
  1.27     Sec. 2.  Minnesota Statutes 2002, section 295.52, 
  1.28  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
  2.2   hospital equal to ~~two~~ 1.75 percent of its gross revenues. 
  2.3      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
  2.4   2005, and applies to taxes due on or after that date. 
  2.5      Sec. 3.  Minnesota Statutes 2002, section 295.52, 
  2.6   subdivision 1a, is amended to read: 
  2.7      Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
  2.8   surgical center equal to ~~two~~ 1.75 percent of its gross revenues. 
  2.9      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
  2.10  2005, and applies to taxes due on or after that date. 
  2.11     Sec. 4.  Minnesota Statutes 2002, section 295.52, 
  2.12  subdivision 2, is amended to read: 
  2.13     Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
  2.14  care provider equal to ~~two~~ 1.75 percent of its gross revenues. 
  2.15     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
  2.16  2005, and applies to taxes due on or after that date. 
  2.17     Sec. 5.  Minnesota Statutes 2002, section 295.52, 
  2.18  subdivision 3, is amended to read: 
  2.19     Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 
  2.20  imposed on each wholesale drug distributor equal to ~~two~~ 1.75 
  2.21  percent of its gross revenues.  
  2.22     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
  2.23  2005, and applies to taxes due on or after that date. 
  2.24     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  2.25  297F.05, subdivision 1, is amended to read: 
  2.26     Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
  2.27  the sale of cigarettes in this state, upon having cigarettes in 
  2.28  possession in this state with intent to sell, upon any person 
  2.29  engaged in business as a distributor, and upon the use or 
  2.30  storage by consumers, at the following rates: 
  2.31     (1) on cigarettes weighing not more than three pounds per 
  2.32  thousand, ~~24~~ 38.5 mills on each such cigarette; and 
  2.33     (2) on cigarettes weighing more than three pounds per 
  2.34  thousand, ~~48~~ 77 mills on each such cigarette. 
  2.35     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.
  2.36     Sec. 7.  Minnesota Statutes 2002, section 297F.05, 
  3.1   subdivision 3, is amended to read: 
  3.2      Subd. 3.  [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 
  3.3   all tobacco products in this state and upon any person engaged 
  3.4   in business as a distributor, at the rate of ~~35~~ 47 percent of 
  3.5   the wholesale sales price of the tobacco products.  The tax is 
  3.6   imposed at the time the distributor: 
  3.7      (1) brings, or causes to be brought, into this state from 
  3.8   outside the state tobacco products for sale; 
  3.9      (2) makes, manufactures, or fabricates tobacco products in 
  3.10  this state for sale in this state; or 
  3.11     (3) ships or transports tobacco products to retailers in 
  3.12  this state, to be sold by those retailers. 
  3.13     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.
  3.14     Sec. 8.  Minnesota Statutes 2002, section 297F.05, 
  3.15  subdivision 4, is amended to read: 
  3.16     Subd. 4.  [USE TAX; TOBACCO PRODUCTS.] A tax is imposed 
  3.17  upon the use or storage by consumers of tobacco products in this 
  3.18  state, and upon such consumers, at the rate of ~~35~~ 47 percent of 
  3.19  the cost to the consumer of the tobacco products. 
  3.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.
  3.21     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
  3.22  297F.10, subdivision 1, is amended to read: 
  3.23     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
  3.24  received from cigarette taxes, as well as related penalties, 
  3.25  interest, license fees, and miscellaneous sources of revenue 
  3.26  shall be deposited by the commissioner in the state treasury and 
  3.27  credited as follows: 
  3.28     (1) the revenue produced by ~~3.25~~ 3.4 mills of the tax on 
  3.29  cigarettes weighing not more than three pounds a thousand and 
  3.30  ~~6.5~~ 6.8 mills of the tax on cigarettes weighing more than three 
  3.31  pounds a thousand must be credited to the Academic Health Center 
  3.32  special revenue fund hereby created and is annually appropriated 
  3.33  to the Board of Regents at the University of Minnesota for 
  3.34  Academic Health Center funding at the University of Minnesota; 
  3.35  and 
  3.36     (2) the revenue produced by ~~1.25~~ 1.3 mills of the tax on 
  4.1   cigarettes weighing not more than three pounds a thousand and 
  4.2   ~~2.5~~ 2.6 mills of the tax on cigarettes weighing more than three 
  4.3   pounds a thousand must be credited to the medical education and 
  4.4   research costs account hereby created in the special revenue 
  4.5   fund and is annually appropriated to the commissioner of health 
  4.6   for distribution under section 62J.692, subdivision 4; and 
  4.7      (3) the balance of the revenues derived from taxes, 
  4.8   penalties, and interest (under this chapter) and from license 
  4.9   fees and miscellaneous sources of revenue shall be credited to 
  4.10  the general fund. 
  4.11     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.
  4.12     Sec. 10.  [FLOOR STOCKS TAX.] 
  4.13     Subdivision 1.  [CIGARETTES.] (a) A floor stocks tax is 
  4.14  imposed on every person engaged in business in this state as a 
  4.15  distributor, retailer, subjobber, vendor, manufacturer, or 
  4.16  manufacturer's representative of cigarettes, on the stamped 
  4.17  cigarettes and unaffixed stamps in the person's possession or 
  4.18  under the person's control at 12:01 a.m. on January 1, 2005.  
  4.19  The tax is imposed at the following rates, subject to the 
  4.20  discounts in Minnesota Statutes, section 297F.08, subdivision 7: 
  4.21     (1) on cigarettes weighing not more than three pounds per 
  4.22  thousand, 14.5 mills on each cigarette; and 
  4.23     (2) on cigarettes weighing more than three pounds per 
  4.24  thousand, 29 mills on each cigarette. 
  4.25     (b) Each distributor, by January 8, 2005, shall file a 
  4.26  report with the commissioner of revenue, in the form the 
  4.27  commissioner prescribes, showing the stamped cigarettes and 
  4.28  unaffixed stamps on hand at 12:01 a.m. on January 1, 2005, and 
  4.29  the amount of tax due on the cigarettes and unaffixed stamps.  
  4.30  The tax imposed by this section is due and payable by February 
  4.31  1, 2005, and after that date bears interest as provided in 
  4.32  Minnesota Statutes, section 270.75.  Each retailer, subjobber, 
  4.33  vendor, manufacturer, or manufacturer's representative shall 
  4.34  file a return with the commissioner, in the form the 
  4.35  commissioner prescribes, showing the cigarettes on hand at 12:01 
  4.36  a.m. on January 1, 2005, and pay the tax due on the cigarettes 
  5.1   by February 1, 2005.  Tax not paid by the due date bears 
  5.2   interest as provided in Minnesota Statutes, section 270.75. 
  5.3      Subd. 2.  [TOBACCO PRODUCTS.] A floor stocks tax is imposed 
  5.4   on every person engaged in business in this state as a 
  5.5   distributor of tobacco products, at the rate of 12 percent of 
  5.6   the wholesale sales price of each tobacco product in the 
  5.7   person's possession or under the person's control at 12:01 a.m. 
  5.8   on January 1, 2005, and the amount of tax due on them.  The tax 
  5.9   imposed by this section, less the discount provided in Minnesota 
  5.10  Statutes, section 297F.09, subdivision 2, is due and payable by 
  5.11  February 1, 2005, and thereafter bears interest as provided in 
  5.12  Minnesota Statutes, section 270.75. 
  5.13     Subd. 3.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
  5.14  section is subject to the audit, assessment, and collection 
  5.15  provisions applicable to the taxes imposed under Minnesota 
  5.16  Statutes, chapter 297F.  The commissioner of revenue shall 
  5.17  deposit the revenue from the tax imposed under this section in 
  5.18  the health care access fund in the state treasury. 
  5.19     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2005.