BILL NUMBER: SB 591 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 16, 2015
INTRODUCED BY Senator Pan
(Principal coauthor: Assembly Member Bonta)
FEBRUARY 26, 2015
An act to amend Sections 30104, 30108, and 30181 of, and to add
Article 2.5 (commencing with Section 30130.50) to Chapter 2 of Part
13 of Division 2 of, the Revenue and Taxation Code, relating to
taxation, and making an appropriation therefor, to take
effect immediately, tax levy. public health finance.
LEGISLATIVE COUNSEL'S DIGEST
SB 591, as amended, Pan. Cigarette and tobacco products taxes:
California Tobacco Tax Act of 2015.
The Cigarette and Tobacco Products Tax Law, the violation of which
is a crime, imposes a tax of $0.87 per package of 20 cigarettes on
every distributor of cigarettes and a tax on the wholesale cost of
tobacco products distributed at a tax rate that is equivalent to the
combined rate of all taxes imposed on cigarettes, and at a rate
equivalent to $0.50 per pack cigarette tax. Revenues from taxes
imposed under this law are deposited in specified accounts. These
taxes are inclusive of the taxes imposed under the Tobacco Tax and
Health Protection Act of 1988 (Proposition 99) and the California
Families and Children and Families Act
of 1998 (Proposition 10).
This bill would, on or after the first day of the first
calendar quarter commencing more than 90 days on or after the
effective date of the bill, beginning January 1, 2016,
would impose an additional tax on the distribution of
cigarettes at the rate of $0.10 for each cigarette
distributed distrib uted, which would
be $2.00 per pack; would require a dealer and a wholesaler to file a
return with the State Board of Equalization showing the number of
cigarettes in its possession or under its control on that date, and
impose a related floor stock tax; and would require a licensed
cigarette distributor to file a return with the board and pay a
cigarette indicia adjustment tax at the rate equal to the difference
between the existing tax rate and the tax rate imposed by this bill
for cigarette tax stamps in its possession or under its control on
that date. Because the bill would impose an additional tax on
cigarettes under the Cigarette and Tobacco Products Tax Law, it would
increase the tax upon the distribution of tobacco products under
that law.
The bill would provide that the revenues collected from the
additional tax be deposited in the California Tobacco Tax Act of 2015
Fund created by this bill, which would be a continuously
appropriated fund, and transferred into accounts
within that fund, which are created by this bill, the Tobacco
Prevention and Education Account, the Tobacco Disease Related Health
Care Account, and the Tobacco Law Enforcement Account to be
expended for specified purposes. Because the California Tobacco Tax
Act of 2015 Fund would be a continuously appropriated fund, the bill
would make an appropriation. Account. The bill would
provide that revenue from this tax would not be considered General
Fund revenue, and would limit the use or loan of those revenues, as
provided.
The bill would require moneys in the California Tobacco Tax Act of
2015 Fund to be transferred from the fund to the California Children
and Families First Trust Fund, which is a continuously appropriated
fund, the Cigarette and Tobacco Products Surtax Fund, the Breast
Cancer Fund, and the General Fund, as necessary to offset revenue
decreases to those funds directly resulting from imposition of
additional taxes by these provisions. Because this bill would require
funds to be transferred to a continuously appropriated fund, it
would make an appropriation.
Because this bill would impose new requirements under the
Cigarette and Tobacco Products Tax Law, the violation of which is a
crime, it would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
This bill would take effect immediately as a tax levy.
This bill would become operative only if AB 1396 of the 2015-16
Regular Session is also enacted and takes effect on or before January
1, 2016.
Vote: 2/3. Appropriation: yes no .
Fiscal committee: yes. State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) Tobacco use is the single most preventable cause of death and
disease in California, claiming the lives of more than
36,000 40,000 people every year. California
still has approximately 3.4 3.64
million adult smokers and 200,000 224,000
youth smokers.
(b) The inevitable health care costs of smoking come to almost $10
for every pack of cigarettes sold in California.
(c) Tobacco use costs Californians more than $9.1
$13.29 billion in tobacco-related medical
expenses every year. The cost of lost productivity due to tobacco use
adds an additional estimated $8.5 $10.35
billion to the annual economic consequences of smoking in
California.
(d) The treatment of cancer, heart disease and stroke, lung
disease, diabetes, and other diseases related to tobacco use
continues to impose a significant burden upon California's
overstressed health care system, including publicly funded health
care programs.
(e) In 2015-16, it is estimated that the General Fund cost of
publicly funded health care programs to the state will be more than
$18 billion. In 2015-16, it is estimated that publicly funded health
care programs will provide health care coverage to more than 12
million Californians. At the same time, hundreds of thousands of
families and children go without any medical coverage due to
financial constraints upon the state and local government budgets and
recent cutbacks in publicly funded health care programs.
(f) A recent cost-benefit analysis concluded that if states
followed the United States Centers for Disease Control and Prevention'
s Best Practices for Comprehensive Tobacco Control Programs 2007
funding guidelines, up to 14 to 20 times the cost of program
implementation could be saved through reduced medical and
productivity costs as well as reduced Medicaid costs.
(g) The California Tobacco Tax Act of 2015 will help fund the
comprehensive California Tobacco Control Program designed to change
social norms about tobacco and discourage individuals from taking up
smoking and the use of other tobacco products through educational
programs, thereby saving the state and local governments significant
money now and in the future.
(h) Tobacco tax increases are an appropriate way to mitigate the
impacts of tobacco-related diseases and improve existing programs
providing for quality and access to health care services for families
and children.
(i) An increase in the tobacco tax will have an immediate effect
on smoking and is the most appropriate mechanism to fund services to
prevent tobacco use, help people quit smoking, and discourage many
people from taking up smoking.
(j) California taxes cigarettes at only $0.87 per pack, and ranks
33rd in tobacco tax rates, reflecting one of the lowest tobacco taxes
in the United States. Thirty states have cigarette tax rates of $1
per pack or higher, and California is well below other west coast
states (Washington: $3.025, Oregon: $1.18,
$1.31, and Arizona: $2). California last raised its tobacco tax
in 1998.
(k) The burden of smoking is not equally shared across California
populations and communities. Tobacco use rates are much higher than
the general population in African Americans, white men, Korean men,
enlisted military personnel, lesbian, gay, bisexual, and transgender,
young adult, rural, and low-income populations.
(l) A reinvigorated tobacco control program will allow targeted
public health and research efforts to combat the tobacco industry's
predatory marketing to ethnic groups, driving down smoking rates and
ultimately reducing heart disease, stroke, lung disease, and cancer
in these California communities, which together represent more than
half of our state's residents.
SEC. 2. Section 30104 of the Revenue and Taxation Code is amended
to read:
30104. The taxes imposed by this part shall not apply to the sale
of cigarettes or tobacco products by a distributor to a common
carrier engaged in interstate or foreign passenger service or to a
person authorized to sell cigarettes or tobacco products on the
facilities of the carrier. Whenever cigarettes or tobacco products
are sold by distributors to common carriers engaged in interstate or
foreign passenger service for use or sale on facilities of the
carriers, or to persons authorized to sell cigarettes or tobacco
products on those facilities, the tax imposed under this part shall
not be levied with respect to the sales of the cigarettes or tobacco
products by the distributors, but a tax is hereby levied upon the
carriers or upon the persons authorized to sell cigarettes or tobacco
products on the facilities of the carriers, as the case may be, for
the privilege of making sales in California at the same rate as set
forth under this part. Those common carriers and authorized persons
shall pay the tax imposed by this section and file reports with the
board, as provided in Section 30186.
SEC. 3. Section 30108 of the Revenue and Taxation Code is amended
to read:
30108. (a) Every distributor engaged in business in this state
and selling or accepting orders for cigarettes or tobacco products
with respect to the sale of which the tax imposed under this part is
inapplicable shall, at the time of making the sale or accepting the
order or, if the purchaser is not then obligated to pay the tax with
respect to his or her distribution of the cigarettes or tobacco
products, at the time the purchaser becomes so obligated, collect the
tax from the purchaser, if the purchaser is other than a licensed
distributor, and shall give to the purchaser a receipt therefor in
the manner and form prescribed by the board.
(b) Every person engaged in business in this state and making
gifts of untaxed cigarettes or tobacco products as samples with
respect to which the tax imposed under this part is inapplicable
shall, at the time of making the gift or, if the donee is not then
obligated to pay the tax with respect to his or her distribution of
the cigarettes or tobacco products, at the time the donee becomes so
obligated, collect the tax from the donee, if the donee is other than
a licensed distributor, and shall give the donee a receipt therefor
in the manner and form prescribed by the board. This section shall
not apply to those distributions of cigarettes or tobacco products
that are exempt from tax under Section 30105.5.
(c) "Engaged in business in the state" means and includes any of
the following:
(1) Maintaining, occupying, or using, permanently or temporarily,
directly or indirectly, or through a subsidiary, or agent, by
whatever name called, an office, place of distribution, sales or
sample room or place, warehouse or storage place, or other place of
business.
(2) Having any representative, agent, salesperson, canvasser, or
solicitor operating in this state under the authority of the
distributor or its subsidiary for the purpose of selling, delivering,
or the taking of orders for cigarettes or tobacco products.
(d) The taxes required to be collected by this section constitute
debts owed by the distributor, or other person required to collect
the taxes, to the state.
SEC. 4. Article 2.5 (commencing with Section 30130.50) is added to
Chapter 2 of Part 13 of Division 2 of the Revenue and Taxation Code,
to read:
Article 2.5. The California Tobacco Tax Act of 2015
30130.50. For the purposes of this article:
(a) "Cigarette" has the same meaning as in Section 30003 as it
read on January 1, 2013. 2015.
(b) "Tobacco products" includes, but is not limited to, all forms
of cigars, smoking tobacco, chewing tobacco, snuff, and any other
articles or products made of, or containing at least 50 percent,
tobacco, but does not include cigarettes.
30130.51. In addition to any other taxes imposed upon the
distribution of cigarettes, there shall be imposed an additional tax
upon every distributor of cigarettes at the rate of one hundred mills
($0.10) for each cigarette distributed on or after the
first day of the first calendar quarter commencing more than 90 days
after the effective date of this act. January 1, 2016.
30130.52. (a) (1) Every dealer and wholesaler, for the privilege
of holding or storing cigarettes for sale, use, or consumption, shall
pay a floor stock tax for each cigarette in its possession or under
its control in this state at 12:01 a.m. on the first day of
the first calendar quarter commencing more than 90 days after the
effective date of this act January 1, 2016, at
the rate of one hundred mills ($0.10) for each cigarette.
(2) Every dealer and wholesaler shall file a return with the
State Board of Equalization board on or
before the first day of the first calendar quarter
commencing more than 180 days after the effective date of this act
July 1, 2016, on a form prescribed by the
State Board of Equalization, board,
showing the number of cigarettes in its possession or under its
control in this state at 12:01 a.m. on the first day of the
first calendar quarter commencing more than 90 days after the
effective date of this act. January 1, 2016. The
amount of tax shall be computed and shown on the return.
(b) (1) Every licensed cigarette distributor, for the privilege of
distributing cigarettes and for holding or storing cigarettes for
sale, use, or consumption, shall pay a cigarette indicia adjustment
tax for each California cigarette tax stamp that is affixed to any
package of cigarettes and for each unaffixed California cigarette tax
stamp in its possession or under its control at 12:01 a.m. on
the first day of the first calendar quarter commencing more
than 90 days after the effective date of this act
January 1, 2016, at the following rates:
(A) Two dollars and fifty cents ($2.50) for each stamp bearing the
designation "25."
(B) Two dollars ($2) for each stamp bearing the designation "20."
(C) One dollar ($1) for each stamp bearing the designation "10."
(2) Every licensed cigarette distributor shall file a return with
the board on or before the first day of the first calendar
quarter commencing 180 days after the effective date of this act
July 1, 2016, on a form prescribed by the board,
showing the number of stamps described in subparagraphs (A), (B),
and (C) of paragraph (1). The amount of tax shall be computed and
shown on the return.
(c) The taxes required to be paid by this section are due and
payable on or before the first day of the first calendar
quarter commencing 180 days after the effective date of this act.
July 1, 2016. Payments shall be made by
remittances payable to the board and the payments shall accompany the
return and forms required to be filed by this section.
(d) Any amount required to be paid by this section that is not
timely paid shall bear interest at the rate and by the method
established pursuant to Section 30202 from the first day of
the first calendar quarter commencing 180 days after the effective
date of this act, July 1, 2016, until paid, and
shall be subject to determination, and redetermination, and any
penalties provided with respect to determinations and
redeterminations.
30130.53. (a) The State Board of Equalization shall determine
within one year of the effective date of this act, and annually
thereafter, the effect that the additional taxes imposed on
cigarettes by this article, and the resulting increase in the tax on
tobacco products required by subdivision (b) of Section 30123, have
on the consumption of cigarettes and tobacco products in this state.
To the extent that a decrease in consumption is determined by the
State Board of Equalization to be a direct result of the additional
tax imposed by this article, or the resulting increase in the tax on
tobacco products required by subdivision (b) of Section 30123, the
State Board of Equalization shall determine the fiscal effect the
decrease in consumption has on the Cigarette and Tobacco Products
Surtax Fund created by Section 30122 (Proposition 99 as approved by
the voters at the November 8, 1988, statewide general election), the
Breast Cancer Fund created by Section 30461.6, the California
Children and Families Trust Fund created by Section 30131
(Proposition 10 as approved by the voters at the November 3, 1998,
statewide general election), and the General Fund with respect to
revenues derived from Section 30101.
(b) Funds shall be transferred from the California Tobacco Tax Act
of 2015 Fund to the Cigarette and Tobacco Products Surtax Fund, the
Breast Cancer Fund, the California Children and Families Trust Fund,
and the General Fund, to offset the revenue decrease directly
resulting from imposition of additional taxes by this article.
(c) Transfers under this section shall be made by the board at
times as the board determines necessary to further the intent of this
section.
30130.54. (a) The California Tobacco Tax Act of 2015 Fund is
hereby established in the State Treasury for the purposes set forth
in this article. All revenues, less refunds and moneys
transferred pursuant to Section 30130.53 , derived from the
taxes imposed by this article shall be deposited in the California
Tobacco Tax Act of 2015 Fund.
(b) Moneys in the California Tobacco Tax Act of 2015 Fund
, less moneys transferred pursuant to Section 30130.53,
shall be transferred as follows:
(1) ___ percent to the Tobacco Prevention and Education Account,
which is hereby created in the California Tobacco Tax Act of 2015
Fund.
(2) ___ percent to the Tobacco Disease Related Health Care
Account, which is hereby created in the California Tobacco Tax Act of
2015 Fund.
(3) ___ percent to the Tobacco Law Enforcement Account, which is
hereby created in the California Tobacco Tax Act of 2015 Fund.
(c) Funds deposited into the California Tobacco Tax Act of 2015
Fund may be placed into the Pooled Money Investment Account for
investment only, and interest earned shall be credited to the fund
and deposited, apportioned, and expended only in accordance with this
article and its purposes.
(d) Notwithstanding any other law, the California Tobacco Tax Act
of 2015 Fund is a trust fund established solely to carry out the
purposes set forth in this article and all revenues deposited into
the California Tobacco Tax Act of 2015 Fund, together with interest
earned by the fund, are hereby continuously appropriated without
regard to fiscal year to be expended only in accordance with this
article and its purposes.
(e)
(d) Notwithstanding any other law, the taxes imposed by
this article and the revenue derived therefrom, including investment
interest, shall not be considered to be part of the General Fund, as
that term is used in Chapter 1 (commencing with Section 16300) of
Part 2 of Division 4 of the Government Code, shall not be considered
General Fund revenue for purposes of Section 8 of Article XVI of the
California Constitution, and its implementing statutes, and shall not
be considered "moneys to be applied by the state for the support of
school districts and community college districts" pursuant to Section
8 of Article XVI of the California Constitution, and its
implementing statutes.
(f)
(e) Notwithstanding any other law, revenues deposited
into the California Tobacco Tax Act of 2015 Fund, and any interest
earned by the fund, shall only be used for the specific purposes set
forth in this article. Revenues deposited into the California Tobacco
Tax Act of 2015 Fund shall not be subject to appropriation,
reversion, or transfer by the Legislature, the Governor, the Director
of Finance, or the Controller for any other purpose, nor shall the
funds be loaned to the General Fund or any other fund of the state or
any local government fund.
(g)
(f) All revenues deposited into the California Tobacco
Tax Act of 2015 Fund shall be expended only for the purposes
expressed in this article, and shall be used only to supplement
existing levels of service and not to fund existing levels of
service. Moneys in the fund shall not be used to supplant state or
local general fund moneys for any purpose.
30130.55. After transferring the moneys as required pursuant to
subdivision (b) of Section 30130.53 and pursuant to subdivision (b)
of Section 30130.54, the Controller shall allocate the moneys from
the accounts in the California Tobacco Tax Act of 2015 Fund as
follows:
(a) The Tobacco Prevention and Education Account shall be
allocated to supplement tobacco prevention and control programs as
follows:
(1) __ percent to the State Department of Public Health.
(2) __ percent to the State Department of Education.
(3) ___percent to the University of California.
(b) Funds in the Tobacco Disease Related Health Care Account shall
be allocated to the State Department of Health Care Services to
improve existing programs to provide quality and access to health
care programs for families and children pursuant to Chapter 7
(commencing with Section 14000) to Chapter 8.9 (commencing with
Section 14700), inclusive, of Part 3 of Division 9 of the Welfare and
Institutions Code.
(c) Funds in the Tobacco Law Enforcement Account shall be
allocated to the State Board of Equalization, the Department of
Justice, and the State Department of Public Health for the purpose of
supplementing funding for the enforcement of laws that regulate the
distribution and sale of cigarettes and other tobacco products,
including, but not limited to, laws that prohibit cigarette
smuggling, counterfeiting, selling untaxed tobacco, selling tobacco
without a proper license, and selling tobacco to minors, and
enforcing tobacco-related laws, court judgments, and settlements.
(d) Not more than 2 percent of the funds received from the
California Tobacco Tax Act of 2015 Fund shall be used by any
department for administrative costs.
(e) The Department of Justice, the State Department of Public
Health, the State Department of Education, the State Department of
Health Care Services, and the University of California shall, on an
annual basis, publish on their respective Internet Web sites an
accounting of moneys received from the California Tobacco Tax Act of
2015 Fund and how the moneys were spent.
SEC. 5. Section 30181 of the Revenue and Taxation Code is amended
to read:
30181. (a) If any tax imposed upon cigarettes under this part is
not paid through the use of stamps or meter impressions, the tax
shall be due and payable monthly on or before the 25th day of the
month following the calendar month in which a distribution of
cigarettes occurs, or in the case of a sale of cigarettes on the
facilities of a common carrier for which the tax is imposed pursuant
to Section 30104, the tax shall be due and payable monthly on or
before the 25th day of the month following the calendar month in
which a sale of cigarettes on the facilities of the carrier occurs.
(b) Each distributor of tobacco products shall file a return in
the form, as prescribed by the board, that may include, but not be
limited to, electronic media respecting the distributions of tobacco
products and their wholesale cost during the preceding month, and any
other information as the board may require to carry out this part.
The return shall be filed with the board on or before the 25th day of
the calendar month following the close of the monthly period for
which it relates, together with a remittance payable to the board, of
the amount of tax, if any, due under Article 2 (commencing with
Section 30121) or Article 3 (commencing with Section 30131) of
Chapter 2 for that period.
(c) To facilitate the administration of this part, the board may
require the filing of the returns for longer than monthly periods.
(d) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
SEC. 6. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 7. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SEC. 7. This act shall become operative only if
Assembly Bill 1396 of the 2015-16 Regular Session is also enacted and
takes effect on or before January 1, 2016.