BILL NUMBER: SB 600 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senators Padilla and Steinberg
( Coauthors: Senators
DeSaulnier, Oropeza, and Romero )
FEBRUARY 27, 2009
An act to add Article 4 (commencing with Section 30135) to Chapter
2 of Part 13 of Division 2 of the Revenue and Taxation Code,
relating to taxation, making an appropriation therefor, to take
effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 600, as amended, Padilla. Cigarette and Tobacco Products
Taxes: Tobacco Tax and Health Protection Fund.
The Cigarette and Tobacco Products Tax Law, the violation of which
is a crime, imposes a tax on every distributor of cigarettes and
tobacco products at specified rates, including additional taxes
imposed under the Tobacco Tax and Health Protection Act of 1988
(Proposition 99) and the California Families and Children Act of 1998
(Proposition 10). A provision of that law imposes a tax upon the
distribution of tobacco products at a tax rate which is equivalent to
the combined rate of all taxes imposed on cigarettes, which is
deposited in specified accounts.
This bill would, commencing 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, impose an additional tax on the
distribution of cigarettes at the rate of ($0.0075)
($0.075) or 75 mills for each cigarette
distributed, and would require a dealer or wholesaler to file a
return with the State Board of Equalization showing the number of
cigarettes in his or her possession or under his or her control on
that date, as specified. 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 would be created by the bill, and
would be allocated, upon appropriation by the Legislature,
for certain purposes. The bill would require funds to be transferred
from the fund to the California Children and Families First Trust
Fund, which is a continuously appropriated fund, the Hospital
Services Account, the Physician Services Account, the Unallocated
Account of the Cigarette and Tobacco Products Surtax Fund, and the
Breast Cancer Fund, as necessary to offset revenue decreases to those
accounts directly resulting from imposition of additional taxes by
these provisions. Because this bill would require funds to be
tranferred transferred to a
continuously appropriated fund, it would make an appropriation.
This bill would result in a change in state taxes for the purpose
of increasing state revenues 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.
Because this bill would impose new requirements under the
Cigarette and Tobacco Products 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 take effect immediately as a tax levy.
Vote: 2/3. Appropriation: yes. 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 and tobacco-related diseases place a tremendous
financial burden upon the persons with the disease, their families,
the health care delivery system, local and state governments, and
society as a whole.
(b) Smoking related diseases have a major negative economic impact
on all taxpayers and the entire health care system, which justifies
the use of tobacco taxes to fund prevention, early detection,
treatment, and research of major diseases.
(c) Tobacco use costs Californians more than $8.6 billion in
medical expenses every year. The cost of lost productivity due to
tobacco use adds an additional estimated $7.2 billion to the annual
economic consequences of smoking in California.
(d) Smoking is the single most preventable cause of death and
disease in California. Fully one in five deaths in California is
attributable to smoking: more than 40,000 every year.
(e) Tobacco use is a major contributor to all the leading causes
of death in California, including heart disease and stroke, cancer,
diabetes, and lung disease.
(f) Smoking can have an adverse health effect on all Californians
because secondhand smoke has been proven to be a leading cause of
disability, disease, and death in California. Secondhand smoke is
causally associated with lung disease, heart disease, cancer, and
obesity.
(g) Increasing the cost of cigarettes and other tobacco products
has proven to be one of the most effective ways to reduce smoking,
especially among youth.
(h) Funding for California's pioneering tobacco prevention and
control program has dropped to the point where it is now far below
what is recommended by federal public health agencies.
(i) Tobacco companies spend approximately 10 times more to promote
tobacco use than the state spends to prevent it and to help tobacco
users quit.
(j) California currently ranks 30th among the states in the level
of cigarette taxes. If this measure were approved, four states would
still have higher cigarette taxes than California.
(k) Forty-four states have raised their tobacco taxes since
California last raised its tax.
(l) Providing new funding for enforcement of tobacco laws will
reduce cigarette smuggling, the sale of black market cigarettes, and
illegal sales of tobacco products to minors.
(m) Increasing tobacco taxes and directing a portion of the
revenues for smoking cessation programs will assist smokers to quit
smoking, especially persons of low socioeconomic status who comprise
the largest number of current smokers.
SEC. 2. Article 4 (commencing with Section 30135) is added to
Chapter 2 of Part 13 of Division 2 of the Revenue and Taxation Code,
to read:
Article 4. Cigarette and Tobacco Products
Tobacco Tax and Health Protection Fund
30135. Notwithstanding any other provision of law, the Tobacco
Tax and Health Protection Fund is hereby created in the State
Treasury for the exclusive purpose of funding the tobacco control
provisions of the Tobacco Tax and Health Protection Act of 2009.
30135.l. The revenue from the taxes imposed pursuant to this
article shall be deposited as follows:
(a) Fifteen percent in the Tobacco Tax and Health Protection Fund.
(b) Eighty-five percent in the General Fund.
30135.2. For the purposes of this article:
(a) "Cigarette" has the same meaning as that in Section 30003, as
it read on January 1, 2009.
(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.
30135.3. 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 seventy-five
mills ($0.0075) ($0.075) for each
cigarette distributed on or after the first calendar quarter
commencing more than 90 days after the effective date of this
section.
30135.4. Every dealer or wholesaler, for the privilege of holding
or storing cigarettes or tobacco products for sale, use, or
consumption, shall pay a floor stock tax for each cigarette or
tobacco product in his or her possession or under his or her 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
section at the rate of seventy-five mills ($0.0075)
($0.075) for each cigarette or the equivalent
rate of tax for each cigarette or the equivalent rate of tax for each
tobacco product, as determined by the State Board of Equalization.
30135.5. To offset the effects of inflation and further reduce
smoking prevalence, on or before March 1 of each year, the State
Board of Equalization shall calculate the percentage increase in the
California Consumer Price Index of December of the prior calendar
year over December of the preceding calendar year. Each fiscal year,
the tax imposed by Section 30135.3 on cigarettes and tobacco products
shall be reset by the State Board of Equalization to reflect the
California Consumer Price Index percentage increase, if any. The
reset tax shall be effective during the state's next fiscal year. For
purposes of this section, the term "California Consumer Price Index"
means the Consumer Price Index as determined by the Department of
Industrial Relations.
30135.6. (a) The State Board of Equalization shall determine
within one year of the operative date of this article, and annually
thereafter, the effect that the additional tax 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 California Children and Families
First Trust Fund created by Proposition 10 as approved by the voters
at the November 4, 1998, statewide general election, the Hospital
Services Account, Physician Services Account, the Unallocated Account
of 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), and the Breast Cancer Fund created
by Section 30461.6.
(b) Funds shall be transferred from the Tobacco Tax and Health
Protection Fund to the California Children and Families First Trust
Fund, the Hospital Services Account, the Physician Services Account,
the Unallocated Account of the Cigarette and Tobacco Products Surtax
Fund, and the Breast Cancer Fund, as necessary 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
such times as the board determines necessary to further the intent of
this section .
30135.7. The Tobacco Tax and Health Protection Fund shall, upon
appropriation by the Legislature annually, be distributed as follows:
(a) Sixty-five percent to the State Department of Public Health
Tobacco Control Program for carrying out tobacco prevention and
control programs. These programs include, but are not limited to, the
following:
(1) Media advertisements and public relations programs to prevent
and reduce the use of tobacco products, as described in paragraph (1)
of subdivision (e) of Section 104375 of the Health and Safety Code.
(2) Competitive grants directed at the prevention of
tobacco-related diseases, as described in Section 104385 of the
Health and Safety Code.
(3) Local health department tobacco prevention and control
programs to prevent tobacco use, as described in Section 104400 of
the Health and Safety Code. Notwithstanding Section 104380 of the
Health and Safety Code, funds shall be appropriated to local lead
agencies based on each county's proportion of the statewide
population.
(4) Tobacco cessation programs and services to assist adult and
minor tobacco users to quit tobacco, including, but not limited to,
counseling, referral and support services, pharmaceutical tobacco
cessation products, and training and technical assistance activities.
(5) Oversight and evaluation of tobacco control programs as
required by subdivisions (b) and (c) of Section 104375 of the Health
and Safety Code.
(b) Fifteen percent to the State Department of Education to be
used solely for programs to prevent or reduce the use of tobacco
products as described in Section 104420 of the Health and Safety
Code. Any program receiving funds pursuant to this section must
participate in program evaluations conducted by the State Department
of Health Care Services pursuant to Article 1 (commencing with
Section 104350) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code.
(c) Ten percent to the University of California to supplement the
Cigarette and Tobacco Products Surtax Medical Research Program
described in Article 2 (commencing with Section 104500) of Chapter 1
of Part 3 of Division 103 of the Health and Safety Code. The research
funded by the program with these supplementary funds shall include,
but not be limited to:
(1) Research to improve the effectiveness of tobacco control
efforts in California, including programs and strategies for
governmental and other organizations to reduce tobacco use and
exposure to secondhand smoke.
(2) Research on the prevention, causes, and treatment of
tobacco-related diseases, including, but not limited to, coronary
heart disease, cerebrovascular disease, chronic obstructive lung
disease, and cancer.
(d) Ten percent to the University of California, for the
establishment and administration of a Lung Cancer Early Detection and
Treatment Research Program. Funds appropriated for the Lung Cancer
Early Detection and Treatment Research Program shall be used to
support research efforts related to lung cancer early detection and
treatment and a program for the collection, assessment, and periodic
publication of data pertinent to the research.
30135.8. All moneys deposited in the Tobacco Tax and Health
Protection Fund shall be appropriated and 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. No moneys in the fund shall be used to supplant state or
local General Fund money for any purpose.
SEC. 3. 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. 4. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.