MISSISSIPPI LEGISLATURE

2006 Regular Session

To: Finance

By: Senator(s) Little, Gordon, Robertson, Albritton, Browning, Butler, Dawkins, Frazier, Harden, Jackson (15th), Jackson (11th), Jackson (32nd), Jordan, King, Nunnelee, Posey, Thomas, Walley, Walls, Williamson

Senate Bill 2310

(As Sent to Governor)

AN ACT TO AMEND SECTION 27-69-13, MISSISSIPPI CODE OF 1972, TO INCREASE THE EXCISE TAX ON CIGARETTES, TO PROVIDE THAT THERE SHALL BE A DISCOUNT OF 1% ON THE ADDITIONAL FACE VALUE OF STAMPS PURCHASED TO COMPLY WITH SUCH INCREASE AND TO REMOVE THE TAXATION OF SNUFF AND OTHER TOBACCO PRODUCTS FROM THE SECTION OF LAW THAT LEVIES THE EXCISE TAX ON DEALERS IN CIGARETTES; TO CREATE NEW SECTION 27-69-13.1, MISSISSIPPI CODE OF 1972, TO LEVY THE EXCISE TAX ON DEALERS IN SNUFF; TO CREATE NEW SECTION 27-69-13.2, MISSISSIPPI CODE OF 1972, TO LEVY THE EXCISE TAX ON DEALERS IN CIGARS, STOGIES, CHEWING TOBACCO, SMOKING TOBACCO AND ALL OTHER TOBACCO PRODUCTS, EXCEPT CIGARETTES AND SNUFF; TO AMEND SECTION 27-69-75, MISSISSIPPI CODE OF 1972, TO REQUIRE A PORTION OF THE MONTHLY TOBACCO TAX REVENUE TO BE DEPOSITED IN THE MUNICIPAL TOBACCO TAX DIVERSION FUND, THE EDUCATION ENHANCEMENT FUND AND THE SCHOOL AD VALOREM TAX REDUCTION FUND; TO CREATE THE MUNICIPAL TOBACCO TAX DIVERSION FUND AND REQUIRE THAT MONEY IN THE FUND BE DISTRIBUTED MONTHLY TO MUNICIPALITIES IN THE PROPORTION THAT SALES TAX COLLECTIONS FOR GROCERIES DURING THE PRECEDING MONTH IN EACH MUNICIPALITY BEAR TO THE TOTAL SALES TAX COLLECTIONS FOR GROCERIES DURING THE PRECEDING MONTH IN ALL THE MUNICIPALITIES OF THE STATE; TO AMEND SECTIONS 27-69-27 AND 27-69-31, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO CREATE A NEW SECTION 27-65-26, MISSISSIPPI CODE OF 1972, TO IMPOSE A SEPARATE SALES TAX LEVY ON RETAIL SALES OF CERTAIN FOOD FOR HUMAN CONSUMPTION AND TO REDUCE THE SALES TAX RATE ON SUCH FOOD EACH FISCAL YEAR THROUGH JULY 1, 2014; TO AMEND SECTION 27-65-17, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 27-65-111, MISSISSIPPI CODE OF 1972, TO EXEMPT FROM SALES TAXATION, EFFECTIVE JULY 1, 2014, RETAIL SALES OF CERTAIN FOOD FOR HUMAN CONSUMPTION; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-69-13, Mississippi Code of 1972, is amended as follows:

[Through June 30, 2007, this section shall read as follows:]

27-69-13. (1) There is * * * imposed, levied and assessed, to be collected and paid as hereinafter provided in this chapter, an excise tax on each person or dealer in cigarettes * * * or substitutes therefor, upon the sale, use, consumption, handling or distribution in the State of Mississippi, * * * at the rate of * * * Three and seventy-five one-hundredths Cents (3.75) on each cigarette sold with a maximum length of one hundred twenty (120) millimeters; any cigarette in excess of this length shall be taxed as if it were two (2) or more cigarettes. * * * However, if the federal tax rate on cigarettes in effect on June 1, 1985, is reduced, then the rate as provided in this section shall be increased by the amount of the federal tax reduction. The tax increase shall take effect on the first day of the month following the effective date of such reduction in the federal tax rate.

 * * *

(2) No stamp evidencing the tax * * * levied on cigarettes by this section shall be of a denomination of less than One Cent (1), and whenever the tax computed at the rates * * * prescribed on cigarettes in this section is a specified amount, plus a fractional part of One Cent (1), the package shall be stamped for the next full cent. However, the additional face value of stamps purchased to comply with taxes imposed by this section after June 1, 1985, and prior to July 1, 2006, shall be subject to a four percent (4%) discount or compensation to dealers for their services rather than the eight percent (8%) discount or compensation allowed by Section 27-69-31, and there shall be a discount of one percent (1%) on the additional face value of stamps purchased to comply with taxes imposed by this section on or after July 1, 2006.

(3) Every wholesaler shall purchase stamps as provided in this chapter, and affix the stamps to all packages of cigarettes handled by him as * * * provided in this chapter.

(4) The * * * tax levied by this section is levied upon the sale, use, gift, possession or consumption of cigarettes or substitutes therefor within the State of Mississippi, and the impact of the tax levied by this section is * * * declared to be on the vendee, user, consumer or possessor of tobacco in this state. * * * When the tax is paid by any other person, the payment shall be considered as an advance payment and shall thereafter be added to the price of the tobacco and recovered from the ultimate consumer or user.

[From and after July 1, 2007, this section shall read as follows:]

27-69-13. (1) There is * * * imposed, levied and assessed, to be collected and paid as hereinafter provided in this chapter, an excise tax on each person or dealer in cigarettes * * * or substitutes therefor, upon the sale, use, consumption, handling or distribution in the State of Mississippi, * * * at the rate of * * * Five Cents (5) on each cigarette sold with a maximum length of one hundred twenty (120) millimeters; any cigarette in excess of this length shall be taxed as if it were two (2) or more cigarettes. * * * However, if the federal tax rate on cigarettes in effect on June 1, 1985, is reduced, then the rate as provided in this section shall be increased by the amount of the federal tax reduction. The tax increase shall take effect on the first day of the month following the effective date of such reduction in the federal tax rate.

 * * *

(2) No stamp evidencing the tax * * * levied on cigarettes by this section shall be of a denomination of less than One Cent (1), and whenever the tax computed at the rates * * * prescribed on cigarettes in this section is a specified amount, plus a fractional part of One Cent (1), the package shall be stamped for the next full cent. However, the additional face value of stamps purchased to comply with taxes imposed by this section after June 1, 1985, and prior to July 1, 2006, shall be subject to a four percent (4%) discount or compensation to dealers for their services rather than the eight percent (8%) discount or compensation allowed by Section 27-69-31, and there shall be no discount on the additional face value of stamps purchased to comply with taxes imposed by this section on or after July 1, 2006.

(3) Every wholesaler shall purchase stamps as provided in this chapter, and affix the stamps to all packages of cigarettes handled by him as * * * provided in this chapter.

(4) The * * * tax levied by this section is levied upon the sale, use, gift, possession or consumption of cigarettes or substitutes therefor within the State of Mississippi, and the impact of the tax levied by this section is * * * declared to be on the vendee, user, consumer or possessor of tobacco in this state. * * * When the tax is paid by any other person, the payment shall be considered as an advance payment and shall thereafter be added to the price of the tobacco and recovered from the ultimate consumer or user.

SECTION 2. The following provision shall be codified as Section 27-69-13.1, Mississippi Code of 1972:

27-69-13.1. (1) There is imposed, levied and assessed, to be collected and paid as hereinafter provided in this chapter, an excise tax on each person or dealer in snuff or substitutes therefor, upon the sale, use, consumption, handling or distribution in the State of Mississippi, at the rate of fifteen percent (15%) of the manufacturer's list price.

(2) The tax levied by this section is levied upon the sale, use, gift, possession or consumption of snuff within the State of Mississippi, and the impact of the tax levied by this section is declared to be on the vendee, user, consumer or possessor of tobacco in this state. When the tax is paid by any other person, the payment shall be considered as an advance payment and shall thereafter be added to the price of the tobacco and recovered from the ultimate consumer or user.

SECTION 3. The following provision shall be codified as Section 27-69-13.2, Mississippi Code of 1972:

27-69-13.2. (1) There is imposed, levied and assessed, to be collected and paid as hereinafter provided in this chapter, an excise tax on each person or dealer in cigars, stogies, chewing tobacco, smoking tobacco and all other tobacco products, except cigarettes and snuff, upon the sale, use, consumption, handling or distribution in the State of Mississippi, at the rate of fifteen percent (15%) of the manufacturer's list price.

(2) The tax levied by this section is levied upon the sale, use, gift, possession or consumption of cigars, stogies, chewing tobacco, smoking tobacco and all other tobacco products, except cigarettes or snuff, and the impact of the tax levied by this section is declared to be on the vendee, user, consumer or possessor of tobacco in this state. When the tax is paid by any other person, such payment shall be considered as an advance payment and shall thereafter be added to the price of the tobacco and recovered from the ultimate consumer or user.

SECTION 4. Section 27-69-75, Mississippi Code of 1972, is amended as follows:

27-69-75. (1) All taxes levied by this chapter shall be payable to the commissioner in cash, or by personal check, cashier's check, bank exchange, post office money order or express money order, and shall be deposited by the commissioner in the State Treasury on the same day collected. No remittance other than cash shall be a final discharge of liability for the tax * * * assessed and levied under this chapter, unless and until it has been paid in cash to the commissioner.

(2) Of the revenue collected monthly as a result of the tax assessed and levied under this chapter:

(a) (i) Through June 30, 2007, One Million Five Hundred Thousand Dollars ($1,500,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(ii) From and after July 1, 2007, through June 30, 2008, Two Million One Hundred Thousand Dollars ($2,100,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(iii) From and after July 1, 2008, through June 30, 2009, Two Million Four Hundred Thousand Dollars ($2,400,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(iv) From and after July 1, 2009, through June 30, 2010, Two Million Seven Hundred Thousand Dollars ($2,700,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(v) From and after July 1, 2010, through June 30, 2011, Three Million Dollars ($3,000,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(vi) From and after July 1, 2011, through June 30, 2012, Three Million Three Hundred Thousand Dollars ($3,300,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(vii) From and after July 1, 2012, through June 30, 2013, Three Million Six Hundred Thousand Dollars ($3,600,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(viii) From and after July 1, 2013, through June 30, 2014, Three Million Nine Hundred Thousand Dollars ($3,900,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(ix) From and after July 1, 2014, Four Million Two Hundred Thousand Dollars ($4,200,000.00) shall be deposited by the commissioner into the Municipal Tobacco Tax Diversion Fund created under Section 5 of Senate Bill No. 2310, 2006 Regular Session.

(b) (i) Through June 30, 2007, One Million Eighty Thousand Dollars ($1,080,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(ii) From and after July 1, 2007, through June 30, 2008, One Million Five Hundred Twelve Thousand Dollars ($1,512,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(iii) From and after July 1, 2008, through June 30, 2009, One Million Seven Hundred Twenty-eight Thousand Dollars ($1,728,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(iv) From and after July 1, 2009, through June 30, 2010, One Million Nine Hundred Forty-four Thousand Dollars ($1,944,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(v) From and after July 1, 2010, through June 30, 2011, Two Million One Hundred Sixty Thousand Dollars ($2,160,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(vi) From and after July 1, 2011, through June 30, 2012, Two Million Three Hundred Seventy-six Thousand Dollars ($2,376,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(vii) From and after July 1, 2012, through June 30, 2013, Two Million Five Hundred Ninety-two Thousand Dollars ($2,592,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(viii) From and after July 1, 2013, through June 30, 2014, Two Million Eight Hundred Eight Thousand Dollars ($2,808,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(ix) From and after July 1, 2014, Three Million Twenty-four Thousand Dollars ($3,024,000.00) shall be deposited by the commissioner into the Education Enhancement Fund created under Section 37-61-33.

(c) (i) Through June 30, 2007, Two Hundred Seventy Thousand Dollars ($270,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(ii) From and after July 1, 2007, through June 30, 2008, Three Hundred Seventy-eight Thousand Dollars ($378,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(iii) From and after July 1, 2008, through June 30, 2009, Four Hundred Thirty-two Thousand Dollars ($432,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(iv) From and after July 1, 2009, through June 30, 2010, Four Hundred Eighty-six Thousand Dollars ($486,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(v) From and after July 1, 2010, through June 30, 2011, Five Hundred Forty Thousand Dollars ($540,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(vi) From and after July 1, 2011, through June 30, 2012, Five Hundred Ninety-four Thousand Dollars ($594,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(vii) From and after July 1, 2012, through June 30, 2013, Six Hundred Forty-eight Thousand Dollars ($648,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(viii) From and after July 1, 2013, through June 30, 2014, Seven Hundred Two Thousand Dollars ($702,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(ix) From and after July 1, 2014, Seven Hundred Fifty-six Thousand Dollars ($756,000.00) shall be deposited by the commissioner into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(3) Except as otherwise provided in subsection (2) of this section, all tobacco taxes collected, including tobacco license taxes, shall be deposited into the State Treasury to the credit of the General Fund.

(4) Wholesalers who are entitled to purchase stamps at a discount, as provided by Section 27-69-31, may have consigned to them, without advance payment, those stamps, if and when the wholesaler gives to the commissioner a good and sufficient bond executed by some surety company authorized to do business in this state, conditioned to secure the payment for the stamps so consigned. The commissioner shall require payment for those stamps not later than thirty (30) days from the date the stamps were consigned.

SECTION 5. (1) There is created in the State Treasury a special fund known as the Municipal Tobacco Tax Diversion Fund which shall be comprised of the money required to be deposited into the fund under Section 27-69-75. Money in the fund shall be expended by the State Tax Commission to make payments to municipalities as required by this section. Unexpended amounts remaining in the special fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned or investment earnings on amounts in the special fund shall be deposited to the credit of the special fund.

(2) On or before August 15, 2006, and each succeeding month thereafter, the State Tax Commission shall distribute from the special fund the amount required to be deposited in the special fund during the preceding month under Section 27-69-75 to each municipality in the state, in an amount equal to the proportion that the sales tax collections from retail sales of food taxed under Section 27-65-26 for the preceding month in each municipality bear to the total sales tax collections from retail sales of food taxed under Section 27-65-26 for the preceding month in all the municipalities of the state; however, from and after July 1, 2014, the State Tax Commission shall distribute from the special fund the amount required to be deposited in the special fund during the preceding month under Section 27-69-75 to each municipality in the state, in an amount equal to the proportion that the sales tax collections for the preceding month in each municipality bear to the total sales tax collections for the preceding month in all the municipalities of the state.

SECTION 6. Section 27-69-27, Mississippi Code of 1972, is amended as follows:

27-69-27. The payment of the tax imposed by this chapter shall be evidenced by affixing stamps to each individual package of cigarettes usually sold to consumers, as distinguished from cartons or larger units which are composed of a number of individual packages.

The stamp shall be affixed within seventy-two (72) hours after the receipt of the cigarettes by the wholesaler, and within forty-eight (48) hours after receipt of the cigarettes by the retailer; provided, that in the case a dealer conducts a wholesale and retail business at one (1) place of business, stamps shall be affixed within forty-eight (48) hours after receipt of the cigarettes. The stamp must be so securely affixed as to require the continued application of water or of steam to remove it, or so that it cannot be otherwise removed without destruction or mutilation.

The excise tax imposed on cigars, smoking tobacco, chewing tobacco, snuff and all other tobacco products except cigarettes shall be computed by the application of the excise tax rate to the manufacturer's list price on all purchases of such tobacco. The excise tax shall be due and payable on or before the fifteenth day of the month next succeeding the month in which the tax accrues. The tax shall be filed with the commissioner on forms prescribed by the commissioner.

Provided, however, manufacturers or other wholesale distributors of tobacco, which are subject to the excise taxes imposed by Sections 27-69-13, 27-69-13.1 and 27-69-13.2 * * * for the privilege of selling or using such tobaccos within this state, who maintain "terminals" or warehouses in which such tobaccos are stored, and who sell only to licensed wholesale dealers within the state who are qualified to purchase and affix the stamps required, may maintain such "spot stocks," intended only for such sales, without affixing the stamps or filing returns and paying the tax.

Any person desiring to maintain such "terminal" or warehouse, shall make application to the commissioner and obtain a permit to maintain such stocks without affixing stamps thereto, for sale exclusively to out-of-state purchasers, or licensed wholesale dealers within this state, and the commissioner is hereby authorized to grant such permit upon the execution and filing with the commissioner, by the applicant, a bond with surety companies, authorized to do business in Mississippi, as surety thereon, and conditioned for the strict compliance by the applicant, with the following conditions under which said privilege may be granted.

The person maintaining such stock of untaxed tobacco shall supply to the commissioner monthly, or at such times as the commissioner may require, complete invoices of all tobaccos received, and shall also supply correct invoices of all tobaccos removed from such "terminal" or warehouse, said invoices to contain the correct name and address of all persons to whom such tobacco shall be delivered or consigned, whether within or without the State of Mississippi.

The penalty of such bond shall be determined by the commissioner, in an amount sufficient to protect the State of Mississippi from any loss of revenue which might occur by reason of the failure of principal to strictly adhere to the requirement that no tobacco would be sold from such stock within the State of Mississippi, except to licensed wholesale dealers.

SECTION 7. Section 27-69-31, Mississippi Code of 1972, is amended as follows:

27-69-31. Dealers subject to the provisions of this chapter shall be allowed, as compensation for their services in affixing the stamps * * * required by this chapter, a sum equal to eight percent (8%) of the face value of the stamps purchased by them, except as otherwise provided in Section 27-69-13(2); however, the commission shall allow no discount on the purchase of stamps by wholesalers of an aggregate amount of less than One Hundred Dollars ($100.00), and by retailers of an aggregate amount of less than Fifty Dollars ($50.00) in any one (1) order.

 * * * The commissioner may, in his discretion, either reduce the compensation allowed, or disallow any compensation for the affixing of stamps, for failure of the dealer to comply with any provisions of the law or rules and regulations promulgated by the commissioner.

SECTION 8. The following provision shall be codified as Section 27-65-26, Mississippi Code of 1972:

27-65-26. (1) From and after July 1, 2006, through June 30, 2007, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of four and one-half percent (4-1/2%).

(2) From and after July 1, 2007, through June 30, 2008, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of three and one-half percent (3-1/2%).

(3) From and after July 1, 2008, through June 30, 2009, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of Three percent (3%).

(4) From and after July 1, 2009, through June 30, 2010, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of two and one-half percent (2-1/2%).

(5) From and after July 1, 2010, through June 30, 2011, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of two percent (2%).

(6) From and after July 1, 2011, through June 30, 2012, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of one and one-half percent (1-1/2%).

(7) From and after July 1, 2012, through June 30, 2013, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of one percent (1%).

(8) From and after July 1, 2013, through June 30, 2014, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed at the rate of one-half percent (1/2%).

(9) This section shall stand repealed from and after July 1, 2014.

SECTION 9. Section 27-65-17, Mississippi Code of 1972, is amended as follows:

27-65-17. (1) (a) Except as otherwise provided in this section, upon every person engaging or continuing within this state in the business of selling any tangible personal property whatsoever there is hereby levied, assessed and shall be collected a tax equal to seven percent (7%) of the gross proceeds of the retail sales of the business.

(b) Retail sales of farm tractors shall be taxed at the rate of one percent (1%) when made to farmers for agricultural purposes.

(c) Retail sales of farm implements sold to farmers and used directly in the production of poultry, ratite, domesticated fish as defined in Section 69-7-501, livestock, livestock products, agricultural crops or ornamental plant crops or used for other agricultural purposes shall be taxed at the rate of three percent (3%) when used on the farm. The three percent (3%) rate shall alsoapply to all equipment used in logging, pulpwood operations or tree farming which is either:

(i) Self-propelled, or

(ii) Mounted so that it is permanently attached to other equipment which is self-propelled or permanently attached to other equipment drawn by a vehicle which is self-propelled.

(d) Except as otherwise provided in subsection (3) of this section, retail sales of aircraft, automobiles, trucks, truck-tractors, semitrailers and mobile homes shall be taxed at the rate of three percent (3%).

(e) Sales of manufacturing machinery or manufacturing machine parts when made to a manufacturer or custom processor for plant use only when the machinery and machine parts will be used exclusively and directly within this state in manufacturing a commodity for sale, rental or in processing for a fee shall be taxed at the rate of one and one-half percent (1-1/2%).

(f) Sales of machinery and machine parts when made to a technology intensive enterprise for plant use only when the machinery and machine parts will be used exclusively and directly within this state for industrial purposes, including, but not limited to, manufacturing or research and development activities, shall be taxed at the rate of one and one-half percent (1-1/2%). In order to be considered a technology intensive enterprise for purposes of this paragraph:

(i) The enterprise shall meet minimum criteria established by the Mississippi Development Authority;

(ii) The enterprise shall employ at least ten (10) persons in full-time jobs;

(iii) At least ten percent (10%) of the workforce in the facility operated by the enterprise shall be scientists, engineers or computer specialists;

(iv) The enterprise shall manufacture plastics, chemicals, automobiles, aircraft, computers or electronics; or shall be a research and development facility, a computer design or related facility, or a software publishing facility or other technology intensive facility or enterprise as determined by the Mississippi Development Authority;

(v) The average wage of all workers employed by the enterprise at the facility shall be at least one hundred fifty percent (150%) of the state average annual wage; and

(vi) The enterprise must provide a basic health care plan to all employees at the facility.

(g) Sales of materials for use in track and track structures to a railroad whose rates are fixed by the Interstate Commerce Commission or the Mississippi Public Service Commission shall be taxed at the rate of three percent (3%).

(h) Sales of tangible personal property to electric power associations for use in the ordinary and necessary operation of their generating or distribution systems shall be taxed at the rate of one percent (1%).

(i) Wholesale sales of beer shall be taxed at the rate of seven percent (7%), and the retailer shall file a return and compute the retail tax on retail sales but may take credit for the amount of the tax paid to the wholesaler on said return covering the subsequent sales of same property, provided adequate invoices and records are maintained to substantiate the credit.

(j) Wholesale sales of food and drink for human consumption to full service vending machine operators to be sold through vending machines located apart from and not connected with other taxable businesses shall be taxed at the rate of eight percent (8%).

(k) Sales of equipment used or designed for the purpose of assisting disabled persons, such as wheelchair equipment and lifts, that is mounted or attached to or installed on a private carrier of passengers or light carrier of property, as defined in Section 27-51-101, at the time when the private carrier of passengers or light carrier of property is sold shall be taxed at the same rate as the sale of such vehicles under this section.

(1) From and after July 1, 2006, through June 30, 2014, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of Section 27-65-111 from the taxes imposed by this chapter if the food items were purchased with food stamps, shall be taxed as provided for in Section 27-65-26.

(2) From and after January 1, 1995, retail sales of private carriers of passengers and light carriers of property, as defined in Section 27-51-101, shall be taxed an additional two percent (2%).

(3) In lieu of the tax levied in subsection (1) of this section, there is levied on retail sales of truck-tractors and semitrailers used in interstate commerce and registered under the International Registration Plan (IRP) or any similar reciprocity agreement or compact relating to the proportional registration of commercial vehicles entered into as provided for in Section 27-19-143, a tax at the rate of three percent (3%) of the portion of the sale that is attributable to the usage of such truck-tractor or semitrailer in Mississippi. The portion of the retail sale that is attributable to the usage of such truck-tractor or semitrailer in Mississippi is the retail sales price of the truck-tractor or semitrailer multiplied by the percentage of the total miles traveled by the vehicle that are traveled in Mississippi. The tax levied pursuant to this subsection (3) shall be collected by the State Tax Commission from the purchaser of such truck-tractor or semitrailer at the time of registration of such truck-tractor or semitrailer.

(4) A manufacturer selling at retail in this state shall be required to make returns of the gross proceeds of such sales and pay the tax imposed in this section.

(5) Any person exercising any privilege taxable under Section 27-65-15 and selling his natural resource products at wholesale or to exempt persons shall pay the tax levied by said section in lieu of the tax levied by this section.

SECTION 10. Section 27-65-111, Mississippi Code of 1972, is amended as follows:

27-65-111. The exemptions from the provisions of this chapter which are not industrial, agricultural or governmental, or which do not relate to utilities or taxes, or which are not properly classified as one of the exemption classifications of this chapter, shall be confined to persons or property exempted by this section or by the Constitution of the United States or the State of Mississippi. No exemptions as now provided by any other section, except the classified exemption sections of this chapter set forth herein, shall be valid as against the tax herein levied. Any subsequent exemption from the tax levied hereunder, except as indicated above, shall be provided by amendments to this section.

No exemption provided in this section shall apply to taxes levied by Section 27-65-15 or 27-65-21, Mississippi Code of 1972.

The tax levied by this chapter shall not apply to the following:

(a) Sales of tangible personal property and services to hospitals or infirmaries owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are subject to and governed by Sections 41-7-123 through 41-7-127.

Only sales of tangible personal property or services which are ordinary and necessary to the operation of such hospitals and infirmaries are exempted from tax.

(b) Sales of daily or weekly newspapers, and periodicals or publications of scientific, literary or educational organizations exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1954, as it exists as of March 31, 1975, and subscription sales of all magazines.

(c) Sales of coffins, caskets and other materials used in the preparation of human bodies for burial.

(d) Sales of tangible personal property for immediate export to a foreign country.

(e) Sales of tangible personal property to an orphanage, old men's or ladies' home, supported wholly or in part by a religious denomination, fraternal nonprofit organization or other nonprofit organization.

(f) Sales of tangible personal property, labor or services taxable under Sections 27-65-17, 27-65-19 and 27-65-23, to a YMCA, YWCA, a Boys' or Girls' Club owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual.

(g) Sales to elementary and secondary grade schools, junior and senior colleges owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are exempt from state income taxation, provided that this exemption does not apply to sales of property or services which are not to be used in the ordinary operation of the school, or which are to be resold to the students or the public.

(h) The gross proceeds of retail sales and the use or consumption in this state of drugs and medicines:

(i) Prescribed for the treatment of a human being by a person authorized to prescribe the medicines, and dispensed or prescription filled by a registered pharmacist in accordance with law; or

(ii) Furnished by a licensed physician, surgeon, dentist or podiatrist to his own patient for treatment of the patient; or

(iii) Furnished by a hospital for treatment of any person pursuant to the order of a licensed physician, surgeon, dentist or podiatrist; or

(iv) Sold to a licensed physician, surgeon, podiatrist, dentist or hospital for the treatment of a human being; or

(v) Sold to this state or any political subdivision or municipal corporation thereof, for use in the treatment of a human being or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof.

"Medicines," as used in this paragraph (h), shall mean and include any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease and which is commonly recognized as a substance or preparation intended for such use; provided that "medicines" do not include any auditory, prosthetic, ophthalmic or ocular device or appliance, any dentures or parts thereof or any artificial limbs or their replacement parts, articles which are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices or other mechanical, electronic, optical or physical equipment or article or the component parts and accessories thereof, or any alcoholic beverage or any other drug or medicine not commonly referred to as a prescription drug.

Notwithstanding the preceding sentence of this paragraph (h), "medicines" as used in this paragraph (h), shall mean and include sutures, whether or not permanently implanted, bone screws, bone pins, pacemakers and other articles permanently implanted in the human body to assist the functioning of any natural organ, artery, vein or limb and which remain or dissolve in the body.

"Hospital," as used in this paragraph (h), shall have the meaning ascribed to it in Section 41-9-3, Mississippi Code of 1972.

Insulin furnished by a registered pharmacist to a person for treatment of diabetes as directed by a physician shall be deemed to be dispensed on prescription within the meaning of this paragraph (h).

(i) Retail sales of automobiles, trucks and truck-tractors if exported from this state within forty-eight (48) hours and registered and first used in another state.

(j) Sales of tangible personal property or services to the Salvation Army and the Muscular Dystrophy Association, Inc.

(k) From July 1, 1985, through December 31, 1992, retail sales of "alcohol blended fuel" as such term is defined in Section 75-55-5. The gasoline-alcohol blend or the straight alcohol eligible for this exemption shall not contain alcohol distilled outside the State of Mississippi.

(l) Sales of tangible personal property or services to the Institute for Technology Development.

(m) The gross proceeds of retail sales of food and drink for human consumption made through vending machines serviced by full line vendors from and not connected with other taxable businesses.

(n) The gross proceeds of sales of motor fuel.

(o) Retail sales of food for human consumption purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, from and after October 1, 1987, or from and after the expiration of any waiver granted pursuant to federal law, the effect of which waiver is to permit the collection by the state of tax on such retail sales of food for human consumption purchased with food stamps.

(p) Sales of cookies for human consumption by the Girl Scouts of America no part of the net earnings from which sales inures to the benefit of any private group or individual.

(q) Gifts or sales of tangible personal property or services to public or private nonprofit museums of art.

(r) Sales of tangible personal property or services to alumni associations of state-supported colleges or universities.

(s) Sales of tangible personal property or services to chapters of the National Association of Junior Auxiliaries, Inc.

(t) Sales of tangible personal property or services to domestic violence shelters which qualify for state funding under Sections 93-21-101 through 93-21-113.

(u) Sales of tangible personal property or services to the National Multiple Sclerosis Society, Mississippi Chapter.

(v) Retail sales of food for human consumption purchased with food instruments issued the Mississippi Band of Choctaw Indians under the Women, Infants and Children Program (WIC) funded by the United States Department of Agriculture.

(w) Sales of tangible personal property or services to a private company, as defined in Section 57-61-5, which is making such purchases with proceeds of bonds issued under Section 57-61-1 et seq., the Mississippi Business Investment Act.

(x) The gross collections from the operation of self-service, coin-operated car washing equipment and sales of the service of washing motor vehicles with portable high-pressure washing equipment on the premises of the customer.

(y) Sales of tangible personal property or services to the Mississippi Technology Alliance.

(z) From and after July 1, 2014, retail sales of food for human consumption not purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, but which would be exempt under paragraph (o) of this section from the taxes imposed by this chapter if the food items were purchased with food stamps.

SECTION 11. This act shall take effect and be in force from and after July 1, 2006.