HOUSE BILL No. 5248 October 16, 2001, Introduced by Rep. Stallworth and referred to the Committee on Tax Policy. A bill to amend 1993 PA 327, entitled "Tobacco products tax act," by amending sections 7 and 12 (MCL 205.427 and 205.432), as amended by 1997 PA 187. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 7. (1) Beginning May 1, 1994, a tax is levied on the 2 sale of tobacco products sold in this state as follows: 3 (a) For cigars, noncigarette smoking tobacco, and smokeless 4 tobacco, 16% of the wholesale price. 5 (b) For cigarettes, 37.5 mills per cigarette. 6 (C) BEGINNING OCTOBER 1, 2001, FOR CIGARETTES, AN ADDITIONAL 7 2.5 MILLS PER CIGARETTE. 8 (2) On or before the twentieth day of each calendar month, 9 every licensee under section 3 other than a retailer, secondary 10 wholesaler, unclassified acquirer licensed as a manufacturer, or 04809'01 JLB 2 1 vending machine operator shall file a return with the department 2 stating the wholesale price of each tobacco product other than 3 cigarettes purchased, the quantity of cigarettes purchased, the 4 wholesale price charged for all tobacco products other than ciga- 5 rettes sold, the number of individual packages of cigarettes and 6 the number of cigarettes in those individual packages, and the 7 number and denominations of stamps affixed to individual packages 8 of cigarettes sold by the licensee for each place of business in 9 the preceding calendar month. The return shall also include the 10 number and denomination of unaffixed stamps in the possession of 11 the licensee at the end of the preceding calendar month. 12 Wholesalers shall also report accurate inventories of cigarettes, 13 both stamped and unstamped at the end of the preceding calendar 14 month. Wholesalers and unclassified acquirers shall also report 15 accurate inventories of affixed and unaffixed stamps by denomina- 16 tion at the beginning and end of each calendar month and all 17 stamps acquired during the preceding calendar month. The return 18 shall be signed under penalty of perjury. The return shall be on 19 a form prescribed by the department and shall contain or be 20 accompanied by any further information the department requires. 21 (3) To cover the cost of expenses incurred in the adminis- 22 tration of this act, at the time of the filing of the return, the 23 licensee shall pay to the department the tax levied in subsection 24 (1) for tobacco products sold during the calendar month covered 25 by the return, less compensation equal to both of the following: 26 (a) One percent of the total amount of the tax due on 27 tobacco products sold other than cigarettes. 04809'01 3 1 (b) One and one-fourth percent of the total amount of the 2 tax due on cigarettes sold. 3 (4) Every licensee and retailer who, on May 1, 1994, has on 4 hand for sale any cigarettes acquired after February 1, 1994 upon 5 which a tax has been paid pursuant to former 1947 PA 265 shall 6 file a complete inventory of those cigarettes before June 1, 1994 7 and shall pay to the department at the time of filing this inven- 8 tory a tax equal to the difference between the tax imposed in 9 subsection (1) and the tax that has been paid pursuant to former 10 1947 PA 265. 11 (5) The department may require the payment of the tax 12 imposed by this act upon the importation or acquisition of a 13 tobacco product. A tobacco product for which the tax under this 14 act has once been imposed and that has not been refunded if paid 15 is not subject upon a subsequent sale to the tax imposed by this 16 act. 17 (6) An abatement or refund of the tax provided by this act 18 may be made by the department for causes the department considers 19 expedient. The department shall certify the amount and the state 20 treasurer shall pay that amount out of the proceeds of the tax. 21 (7) A person liable for the tax may reimburse itself by 22 adding to the price of the tobacco products an amount equal to 23 the tax levied under this act. 24 (8) A wholesaler, unclassified acquirer, or other person 25 shall not sell or transfer any unaffixed stamps acquired by the 26 wholesaler or unclassified acquirer from the department. A 27 wholesaler or unclassified acquirer who has any unaffixed stamps 04809'01 4 1 on hand at the time its license is revoked or expires, or at the 2 time it discontinues the business of selling cigarettes, shall 3 return those stamps to the department. The department shall 4 refund the value of the stamps, less the appropriate discount 5 paid. 6 (9) If the wholesaler or unclassified acquirer has unsalable 7 packs returned from a retailer, secondary wholesaler, vending 8 machine operator, wholesaler, or unclassified acquirer with 9 stamps affixed, the department shall refund the amount of the tax 10 less the appropriate discount paid. If the wholesaler or unclas- 11 sified acquirer has unaffixed unsalable stamps, the department 12 shall exchange with the wholesaler or unclassified acquirer new 13 stamps in the same quantity as the unaffixed unsalable stamps. 14 An application for refund of the tax shall be filed on a form 15 prescribed by the department for that purpose, within 4 years 16 from the date the stamps were originally acquired from the 17 department. A wholesaler or unclassified acquirer shall make 18 available for inspection by the department the unused or spoiled 19 stamps and the stamps affixed to unsalable individual packages of 20 cigarettes. The department may, at its own discretion, witness 21 and certify the destruction of the unused or spoiled stamps and 22 unsalable individual packages of cigarettes that are not return- 23 able to the manufacturer. The wholesaler or unclassified 24 acquirer shall provide certification from the manufacturer for 25 any unsalable individual packages of cigarettes that are returned 26 to the manufacturer. 04809'01 5 1 (10) On or before the twentieth of each month, each 2 manufacturer shall file a report with the department listing all 3 sales of tobacco products to wholesalers and unclassified 4 acquirers during the preceding calendar month and any other 5 information the department finds necessary for the administration 6 of this act. This report shall be in the form and manner speci- 7 fied by the department. 8 (11) Each wholesaler or unclassified acquirer shall submit 9 to the department an unstamped cigarette sales report on or 10 before the twentieth day of each month covering the sale, deliv- 11 ery, or distribution of unstamped cigarettes during the preceding 12 calendar month to points outside of Michigan. A separate sched- 13 ule shall be filed for each state, country, or province into 14 which shipments are made. For purposes of the report described 15 in this subsection, "unstamped cigarettes" means individual pack- 16 ages of cigarettes that do not bear a Michigan stamp. The 17 department may provide the information contained in this report 18 to a proper officer of another state, country, or province recip- 19 rocating in this privilege. 20 Sec. 12. (1) The proceeds derived from the payment of 21 taxes, fees, and penalties provided for under this act and the 22 license fees received by the department shall be deposited with 23 the state treasurer and disbursed only as provided in this 24 section. 25 (2) The tax imposed under section 7(1)(a) shall be disbursed 26 as follows: 04809'01 6 1 (a) 94% of the proceeds shall be credited to the state 2 school aid fund established by section 11 of article IX of the 3 state constitution of 1963. 4 (b) 6% of the proceeds shall be credited to the healthy 5 Michigan fund created under section 5953 of the public health 6 code, 1978 PA 368, MCL 333.5953. 7 (3) The tax imposed on cigarettespursuant toUNDER sec- 8 tion 7(1)(b) shall be disbursed as follows: 9 (a) Beginning May 1, 1994, 5.3% of the proceeds shall be 10 credited to the health and safety fund created in the health and 11 safety fund act, 1987 PA 264, MCL 141.471 to 141.479. 12 (b) 25.3% of the proceeds shall be credited to the general 13 fund of this state. 14 (c) 63.4% of the proceeds shall be credited to the state 15 school aid fund established by section 11 of article IX of the 16 state constitution of 1963. 17 (d) 6% of the proceeds shall be credited to the healthy 18 Michigan fund created under section 5953 of the public health 19 code, 1978 PA 368, MCL 333.5953. 20 (4) THE TAX IMPOSED ON CIGARETTES UNDER SECTION 7(1)(C) 21 SHALL BE DISBURSED AS FOLLOWS: 22 (A) 48% OF THE PROCEEDS SHALL BE USED FOR SCHOOL-BASED 23 HEALTH CLINICS. 24 (B) 12% OF THE PROCEEDS SHALL BE CREDITED TO THE GENERAL 25 FUND OF THIS STATE. 04809'01 7 1 (C) 40% OF THE PROCEEDS SHALL BE CREDITED TO THE HEALTHY 2 MICHIGAN FUND CREATED UNDER SECTION 5953 OF THE PUBLIC HEALTH 3 CODE, 1978 PA 368, MCL 333.5953. 4 (5)(4)The proceeds of the fees and penalties provided 5 for in this act shall be used for the administration of this 6 act. 04809'01 Final page. 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