AB 481

Under current law, the excise tax rate on tobacco products sold in this state is

71 percent of the manufacturer's list price to distributors, except that the tax rate on

moist snuff sold in this state is 100 percent of the manufacturer's list price to

distributors. Under current law, the maximum tax on cigars is 50 cents for each

cigar.

This bill increases the tobacco products tax rate on tobacco products, not

including moist snuff, to 84 percent of the manufacturer's list price to distributors

and eliminates the maximum rate on cigars of 50 cents on each cigar. Under the bill,

however, the excise tax rate on tobacco products sold or consumed in this state is the

greater of the rate based on the manufacturer's list price or the rate determined as

follows:

1. For a package of four cigars, an amount equal to the amount of the cigarette

excise tax (cigarette tax) imposed on a pack of 20 cigarettes, and at a proportionate

rate for any other quantity.

2. For single-unit tobacco products, on each single-use unit, an amount equal

to the cigarette tax imposed on one cigarette.

3. For any smokeless tobacco product that consists of loose tobacco, including

moist snuff, on 1.2 ounces, an amount equal to the cigarette tax imposed on a pack

of 20 cigarettes, and at a proportionate rate for any other quantity.

4. For any loose tobacco that is intended for smoking, on 0.65 ounce, an amount

equal to the cigarette tax imposed on a pack of 20 cigarettes, and at a proportionate

rate for any other quantity.

5. For any other tobacco product, on each package or container, an amount

equal to the cigarette tax imposed on a pack of 20 cigarettes.

Under current law the cigarette tax is 12.6 cents per cigarette ($2.52 for a pack

of 20 cigarettes). Under current law, an inventory tax is imposed on cigarettes held

in inventory for sale or resale so that, if the cigarette tax rate increases, the person

holding cigarettes in inventory must pay the increase on those cigarettes. The bill

creates an inventory tax on tobacco products held in inventory for sale or resale so

that, if the tobacco products tax rates increase, the person holding tobacco products

must pay the increase on those products.

Under current law, for cigarette tax purposes, a cigarette is defined as any roll

of tobacco wrapped in paper or any substance other than tobacco. Under the bill, a

cigarette is defined as any roll of tobacco weighing not more than 4.5 pounds per

thousand that is wrapped in paper or any substance other than tobacco or that is

wrapped in any substance containing tobacco that, because of the type of tobacco

used in the filter or because of its appearance, size, packaging, pricing, or marketing,

is likely to be offered to, purchased by, or consumed by individuals as a cigarette,

regardless of how the roll of tobacco is labeled, but not including any roll of tobacco

that is wrapped in whole tobacco leaf and does not have a filter.