Relates to the imposition of tax on cigars; caps tax at one dollar per cigar.
TITLE OF BILL: An act to amend the tax law, in relation to the tax on certain tobacco products; and providing for the repeal of certain provisions of such law relating thereto
PURPOSE: This bill caps the state imposed tax on cigars at 75% of the wholesale price or $1.00 per cigar, whichever is less.
To remain competitive, and to provide the state with a stream of revenue it can depend upon, it is only logical to impose a reasonable tax cap on cigars, allowing the state to continue collecting revenue and establish ourselves as more competitive to surrounding states in the cigar market.
SUMMARY OF PROVISIONS: Amends sections 471-b and 421-c of the tax law to cap the tax on cigars at 75% of the wholesale price or $1.00 per cigar, whichever is less.
EXISTING LAW: Existing law provides for a 75% of wholesale price tax on cigars, with no maximum as to the dollar amount.
STATEMENT OF SUPPORT: New York companies that manufacture, distribute and sell cigars are an important part of the State's economy, providing well-paying jobs, and paying significant amounts in taxes to the State and local governments.
In June of 2010, the State increased the excise tax rate on cigars by 63%. This increase was on top of a 2009 increase. Together, these new taxes have had a negative impact on businesses and workers in New York State.
Currently, some New York consumers are avoiding the high tax by purchasing the cigars over the Internet, or from non-taxed sources such as Native American smoke shops. Some consumers can also go to neighboring states with lower tax rates including Pennsylvania (which does not tax cigars) , Connecticut (which levies a 27.5% tax), New Jersey or Massachusetts (both which levy a 30% tax).
The current tax rate is 75% of the cigar's wholesale price. As such, the tax on a 25-cent cigar is equal to just under 19 cents, while the tax on a handmade cigar could be as high as $11.25 for just one cigar.
By capping the wholesale sale price on cigars at 75% or $1 dollar per cigar, whichever is less, we can save jobs in New York and prevent people from crossing borders, using the Internet and purchasing from non-taxed sources such as Native American smoke shops.
EFFECTIVE DATE: This act shall take effect on the first day of the month next commencing at least 90 days after this act shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 6839 IN SENATE March 28, 2012 ___________Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to the tax on certain tobacco products; and providing for the repeal of certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The opening paragraph of subdivision 1 of section 471-b of the tax law, as amended by section 2 of part QQ1 of chapter 57 of the laws of 2008, is amended to read as follows: There is hereby imposed and shall be paid a tax on all tobacco products
[possessed in this state by any person for sale]SOLD, SHIPPED OR DELIVERED WITHIN THIS STATE BY ANY PERSON, except that no tax shall be imposed on tobacco products sold under such circumstances that this state is without power to impose such tax, or sold to the United States, or sold to or by a voluntary unincorporated organization of the armed forces of the United States operating a place for the sale of goods pursuant to regulations promulgated by the appropriate executive agency of the United States, to the extent provided in such regulations and policy statements of such an agency applicable to such sales. S 2. Paragraph (a) of subdivision 1 of section 471-b of the tax law, as amended by section 18 of part D of chapter 134 of the laws of 2010, is amended to read as follows: (a) (I) Such tax on tobacco products other than CIGARS, snuff and little cigars shall be at the rate of seventy-five percent of the whole- sale price, and is intended to be imposed only once upon the sale of any tobacco products other than CIGARS, snuff and little cigars. (II) SUCH TAX ON CIGARS SHALL BE AT A RATE OF SEVENTY-FIVE PERCENT OF THE WHOLESALE PRICE OR ONE DOLLAR PER CIGAR, WHICHEVER IS LESS, AND IS INTENDED TO BE IMPOSED ONLY ONCE UPON THE SALE OF ANY CIGAR. S 3. Paragraphs (i), (ii) and (iii) of subdivision (a) of section 471-c of the tax law, paragraphs (i) and (ii) as amended by section 20EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14810-02-2 S. 6839 2
and paragraph (iii) as added by section 21 of part D of chapter 134 of the laws of 2010, are amended to read as follows: (i) Such tax on tobacco products other than CIGARS, snuff and little cigars shall be at the rate of seventy-five percent of the wholesale price. (ii) SUCH TAX ON CIGARS SHALL BE AT THE RATE OF SEVENTY-FIVE PERCENT OF THE WHOLESALE PRICE OR ONE DOLLAR PER CIGAR, WHICHEVER IS LESS, AND IS INTENDED TO BE IMPOSED ONLY ONCE UPON THE SALE OF ANY CIGAR. (III) Such tax on snuff shall be at the rate of two dollars per ounce and a proportionate rate on any fractional parts of an ounce, provided that cans or packages of snuff with a net weight of less than one ounce shall be taxed at the equivalent rate of cans or packages weighing one ounce. Such tax shall be computed based on the net weight as listed by the manufacturer.
[(iii)](IV) Such tax on little cigars shall be at the same rate imposed on cigarettes under this article and is intended to be imposed only once upon the sale of any little cigars. S 4. Subdivision 1 of section 473-a of the tax law, as added by chap- ter 61 of the laws of 1989, is amended to read as follows: 1. Every distributor shall, on or before the twentieth day of each month, file with the commissioner of taxation and finance a return on forms to be prescribed and furnished by the commissioner, showing the quantity and wholesale price of all tobacco products [imported or caused to be imported into the state by him or manufactured in the state by him], SOLD, SHIPPED OR DELIVERED WITHIN THIS STATE BY SUCH DISTRIBUTOR during the preceding calendar month. Every distributor authorized by the commissioner to make returns and pay the tax on tobacco products sold, shipped or delivered by [him]SUCH DISTRIBUTOR to any person in the state shall file a return showing the quantity and wholesale price of all tobacco products so sold, shipped or delivered during the preceding calendar month. Provided, however, the commissioner may, if he OR SHE deems it necessary in order to insure the payment of the taxes imposed by this article, require returns to be made at such times and covering such periods as he OR SHE may deem necessary, and, by regulation, may permit the filing of returns on a quarterly, semi-annual or annual basis, or may waive the filing of returns by a distributor for such time and upon such terms as he OR SHE may deem proper if satisfied that no tax imposed by this article is or will be payable by [him]SUCH DISTRIB- UTOR during the time for which returns are waived. Such returns shall contain such further information as the commissioner may require. S 5. The commissioner of taxation and finance, in conjunction with the director of the division of the budget, shall submit to the governor, the temporary president of the senate, and the speaker of the assembly, an annual report to be submitted in July of each year evaluating the tax on tobacco products. Such report shall include, but not be limited to, the quantity of all tobacco products, by category, sold, shipped or delivered in the state during the preceding fiscal year, the amount of tax revenue received on tobacco products, by category, as well as the number of distributors filing and paying such taxes to the state during the preceding fiscal year. Such report shall be based on data available from the returns filed with the department of taxation and finance as well as from any final determinations of taxes assessed by the depart- ment. Notwithstanding any provision of law to the contrary, the informa- tion contained in the report shall be public information. The report may also include any recommendations for changes in the imposition or admin- istration of the tax, and any other recommendation of such commissionerS. 6839 3
regarding continuing modification, or repeal of such tax, and such other information regarding the tax as the commissioner may feel useful and appropriate. S 6. The commissioner of taxation and finance shall establish proce- dures to provide for a credit against taxes paid by distributors for periods prior to the effective date of this act to offset the taxes due on or after the effective date of this act. S 7. This act shall take effect on the first day of the month next commencing at least ninety days after this act shall have become a law; provided that the commissioner of taxation and finance shall be author- ized on and after the date this act shall have become a law to adopt and amend any rules and regulations and issue any procedure, forms or instructions necessary to implement the provisions of this act on its effective date; and provided further, that sections two and three of this act shall expire and be deemed repealed December 31, 2017.