BILL NUMBER: SB 600 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 9, 2009
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senators Padilla and Steinberg
(Coauthors: Senators DeSaulnier, Oropeza, and Romero)
FEBRUARY 27, 2009
An act to amend Sections 30104, 30108, and 30181 of, and
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($0.075)
of ($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 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, the Public Resources Account, 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 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 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 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 32nd
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. 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 by Sections
30101, 30123, and 30131.2 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 in Sections 30101, 30123, and 30131.2
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 by
Sections 30101, 30123, and 30131.2 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 by Sections 30101, 30123,
and 30131.2 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
which 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. 2. SEC. 4. 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. 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. purposes set forth in this article.
30135.l. The revenue from the taxes imposed pursuant to this
article shall be deposited as follows:
(a)
30135.1. (a) Except for payments of refunds made
pursuant to Article 1 (commencing with Section 30361) of Chapter 6,
and reimbursement of the State Board of Equalization for expenses
incurred in the administration and collection of the tax imposed by
this article, all revenues raised pursuant to the tax imposed by this
article shall be deposited in the Tobacco Tax and Health Protection
Fund.
(b) Money in the Tobacco Tax and Health Protection Fund, except
for money necessary for the purposes set forth in Section 30135.6,
shall be transferred as follows:
(1) Fifteen percent in the Tobacco
Control and Lung Cancer Research Account, which is hereby created in
the Tobacco Tax and Health Protection Fund.
(b)
(2) Eighty-five percent in the Tobacco Tax General
Fund Account, which is hereby created 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 ($0.075) 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. (a) (1)
Every dealer or and 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 ($0.075) 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. cigarette.
(2) Every dealer and wholesaler shall file a return with the
State Board of Equalization on or before the first day of the first
calendar quarter commencing more than 180 days after the effective
date of Section 30135.3 on a form prescribed by the board, showing
the number of cigarettes in his or her possession or under his or her
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 Section
30135.3. 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 his or her possession or under his or her 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 Section 30135.3 at the
following rates:
(A) One dollar and eighty-seven and one-half cents ($1.875) for
each stamp bearing the designation "25."
(B) One dollar and fifty cents ($1.50) for each stamp bearing the
designation "20."
(C) Seventy-five cents ($0.75) 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 Section 30135.3 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 Section 30135.3.
Payments shall be made by remittances payable to the board and the
payments shall accompany the 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
Section 30135.3, until paid, and shall be subject to determination,
and redetermination, and any penalties provided with respect to
determinations and redeterminations.
(e) The taxes imposed under Section 30135.3 and this section shall
be administered and collected by the State Board of Equalization in
accordance with this part.
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 immediately preceding the prior 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, the Physician Services Account, the
Public Resources 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 Public Resources 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
Control and Lung Cancer Research Account shall,
upon appropriation by the Legislature annually, be distributed as
follows:
(a) Sixty-five Forty-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 Ten 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 Twenty 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.
(e) Fifteen percent to support law enforcement efforts to reduce
cigarette smuggling, tobacco tax evasion, and counterfeit tobacco
products, to reduce illegal sales of tobacco products to minors, and
to enforce legal settlement provisions and conduct law enforcement
training and technical assistance activities for tobacco-related
statutes, which money shall be directed in the following manner:
(1) Forty percent to the State Board of Equalization to be used to
enforce laws that regulate the distribution and retail sale of
cigarettes and other tobacco products, such as laws that prohibit
untaxed cigarette and tobacco product smuggling and counterfeiting
and sales of cigarettes and other tobacco products without a proper
license.
(2) Forty percent to the State Department of Public Health to be
used to support programs, including, but not limited to, providing
grants to local law enforcement agencies to provide training and
funding for the enforcement of state and local laws related to the
illegal sales of tobacco to minors, and increasing investigative
activities, compliance checks, and other appropriate activities to
reduce illegal sales of tobacco products to minors under the Stop
Tobacco Access to Kids Enforcement (STAKE) Act, pursuant to Section
22952 of the Business and Professions Code.
(3) Twenty percent to the Attorney General to be used for
activities including, but not limited to, enforcing laws that
regulate the distribution and sale of cigarettes and other tobacco
products, such as 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.
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. 5. Section 30181 of the Revenue
and Taxation Code is amended to read:
30181. (a) When any tax imposed upon cigarettes under
Article 1 (commencing with Section 30101), Article 2 (commencing with
Section 30121), and Article 3 (commencing with Section 30131) of
Chapter 2 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, which 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 to
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.
(e) This section shall become operative on January 1, 2007.
SEC. 3. 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. 4. SEC. 7. This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.