MISSISSIPPI LEGISLATURE

2006 Regular Session

To: Finance

By: Senator(s) Little, Robertson, Gordon, Mettetal, Jordan, Tollison, King

Senate Bill 3084

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 CREATE THE MUNICIPAL SALES 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 SECTION 27-65-75, MISSISSIPPI CODE OF 1972, TO REQUIRE THAT A PORTION OF THE SALES TAX REVENUE COLLECTED EACH MONTH TO BE DEPOSITED IN THE MUNICIPAL SALES TAX DIVERSION FUND, THE EDUCATION ENHANCEMENT FUND AND THE SCHOOL AD VALOREM TAX REDUCTION FUND; 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; TO AMEND SECTION 27-65-17, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO IMPOSE A FEE ON NONSETTLING-MANUFACTURER CIGARETTES AND TO PROVIDE THAT THE REVENUE VENUE DERIVED FROM THE FEE SHALL BE DEPOSITED INTO THE STATE GENERAL FUND; TO REQUIRE MONTHLY REPORTING OF THE NUMBER AND DENOMINATION OF STAMPS AFFIXED TO PACKAGES OF NONSETTLING-MANUFACTURER CIGARETTES; TO REQUIRE REGISTRATION OF NONSETTLING MANUFACTURERS WITH THE ATTORNEY GENERAL; TO REQUIRE DEVELOPMENT, MAINTENANCE, AND PUBLICATION BY THE ATTORNEY GENERAL OF A LIST OF NONSETTLING MANUFACTURERS THAT HAVE CERTIFIED THEIR COMPLIANCE WITH THIS ACT; TO PROVIDE FOR ENFORCEMENT OF THE REQUIREMENTS IMPOSED BY THIS ACT; TO PROHIBIT THE TRANSPORT OF UNSTAMPED CIGARETTES ACROSS STATE LINES; TO PROVIDE FOR REPORTS ON THE TRANSPORT OF STAMPED CIGARETTES ACROSS STATE LINES; 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:

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 * * * Four Cents (4) 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.

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 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 snuff 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 snuff 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. (1) There is created in the State Treasury a special fund known as the Municipal Sales Tax Diversion Fund which shall be comprised of the money required to be deposited into the fund under Section 27-65-75. 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 September 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 27-65-75 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.

SECTION 5. Section 27-65-75, Mississippi Code of 1972, is amended as follows:

27-65-75. On or before the fifteenth day of each month, the revenue collected under the provisions of this chapter during the preceding month shall be paid and distributed as follows:

(1) On or before August 15, 1992, and each succeeding month thereafter through July 15, 1993, eighteen percent (18%) of the total sales tax revenue collected during the preceding month under the provisions of this chapter, except that collected under the provisions of Sections 27-65-15, 27-65-19(3) and 27-65-21, on business activities within a municipal corporation shall be allocated for distribution to the municipality and paid to the municipal corporation. On or before August 15, 1993, and each succeeding month thereafter, eighteen and one-half percent (18-1/2%) of the total sales tax revenue collected during the preceding month under the provisions of this chapter, except that collected under the provisions of Sections 27-65-15, 27-65-19(3) and 27-65-21, on business activities within a municipal corporation shall be allocated for distribution to the municipality and paid to the municipal corporation.

A municipal corporation, for the purpose of distributing the tax under this subsection, shall mean and include all incorporated cities, towns and villages.

Monies allocated for distribution and credited to a municipal corporation under this subsection may be pledged as security for a loan if the distribution received by the municipal corporation is otherwise authorized or required by law to be pledged as security for such a loan.

In any county having a county seat that is not an incorporated municipality, the distribution provided under this subsection shall be made as though the county seat was an incorporated municipality; however, the distribution to the municipality shall be paid to the county treasury in which the municipality is located, and those funds shall be used for road, bridge and street construction or maintenance in the county.

(2) On or before September 15, 1987, and each succeeding month thereafter, from the revenue collected under this chapter during the preceding month, One Million One Hundred Twenty-five Thousand Dollars ($1,125,000.00) shall be allocated for distribution to municipal corporations as defined under subsection (1) of this section in the proportion that the number of gallons of gasoline and diesel fuel sold by distributors to consumers and retailers in each such municipality during the preceding fiscal year bears to the total gallons of gasoline and diesel fuel sold by distributors to consumers and retailers in municipalities statewide during the preceding fiscal year. The State Tax Commission shall require all distributors of gasoline and diesel fuel to report to the commission monthly the total number of gallons of gasoline and diesel fuel sold by them to consumers and retailers in each municipality during the preceding month. The State Tax Commission shall have the authority to promulgate such rules and regulations as is necessary to determine the number of gallons of gasoline and diesel fuel sold by distributors to consumers and retailers in each municipality. In determining the percentage allocation of funds under this subsection for the fiscal year beginning July 1, 1987, and ending June 30, 1988, the State Tax Commission may consider gallons of gasoline and diesel fuel sold for a period of less than one (1) fiscal year. For the purposes of this subsection, the term "fiscal year" means the fiscal year beginning July 1 of a year.

(3) On or before September 15, 1987, and on or before the fifteenth day of each succeeding month, until the date specified in Section 65-39-35, the proceeds derived from contractors' taxes levied under Section 27-65-21 on contracts for the construction or reconstruction of highways designated under the highway program created under Section 65-3-97 shall, except as otherwise provided in Section 31-17-127, be deposited into the State Treasury to the credit of the State Highway Fund to be used to fund that highway program. The Mississippi Department of Transportation shall provide to the State Tax Commission such information as is necessary to determine the amount of proceeds to be distributed under this subsection.

(4) On or before August 15, 1994, and on or before the fifteenth day of each succeeding month through July 15, 1999, from the proceeds of gasoline, diesel fuel or kerosene taxes as provided in Section 27-5-101(a)(ii)1, Four Million Dollars ($4,000,000.00) shall be deposited in the State Treasury to the credit of a special fund designated as the "State Aid Road Fund," created by Section 65-9-17. On or before August 15, 1999, and on or before the fifteenth day of each succeeding month, from the total amount of the proceeds of gasoline, diesel fuel or kerosene taxes apportioned by Section 27-5-101(a)(ii)1, Four Million Dollars ($4,000,000.00) or an amount equal to twenty-three and one-fourth percent (23-1/4%) of those funds, whichever is the greater amount, shall be deposited in the State Treasury to the credit of the "State Aid Road Fund," created by Section 65-9-17. Those funds shall be pledged to pay the principal of and interest on state aid road bonds heretofore issued under Sections 19-9-51 through 19-9-77, in lieu of and in substitution for the funds previously allocated to counties under this section. Those funds may not be pledged for the payment of any state aid road bonds issued after April 1, 1981; however, this prohibition against the pledging of any such funds for the payment of bonds shall not apply to any bonds for which intent to issue those bonds has been published, for the first time, as provided by law before March 29, 1981. From the amount of taxes paid into the special fund under this subsection and subsection (9) of this section, there shall be first deducted and paid the amount necessary to pay the expenses of the Office of State Aid Road Construction, as authorized by the Legislature for all other general and special fund agencies. The remainder of the fund shall be allocated monthly to the several counties in accordance with the following formula:

(a) One-third (1/3) shall be allocated to all counties in equal shares;

(b) One-third (1/3) shall be allocated to counties based on the proportion that the total number of rural road miles in a county bears to the total number of rural road miles in all counties of the state; and

(c) One-third (1/3) shall be allocated to counties based on the proportion that the rural population of the county bears to the total rural population in all counties of the state, according to the latest federal decennial census.

For the purposes of this subsection, the term "gasoline, diesel fuel or kerosene taxes" means such taxes as defined in paragraph (f) of Section 27-5-101.

The amount of funds allocated to any county under this subsection for any fiscal year after fiscal year 1994 shall not be less than the amount allocated to the county for fiscal year 1994.

Any reference in the general laws of this state or the Mississippi Code of 1972 to Section 27-5-105 shall mean and be construed to refer and apply to subsection (4) of Section 27-65-75.

(5) One Million Six Hundred Sixty-six Thousand Six Hundred Sixty-six Dollars ($1,666,666.00) each month shall be paid into the special fund known as the "State Public School Building Fund" created and existing under the provisions of Sections 37-47-1 through 37-47-67. Those payments into that fund are to be made on the last day of each succeeding month hereafter.

(6) An amount each month beginning August 15, 1983, through November 15, 1986, as specified in Section 6 of Chapter 542, Laws of 1983, shall be paid into the special fund known as the Correctional Facilities Construction Fund created in Section 6 of Chapter 542, Laws of 1983.

(7) On or before August 15, 1992, and each succeeding month thereafter through July 15, 2000, two and two hundred sixty-six one-thousandths percent (2.266%) of the total sales tax revenue collected during the preceding month under the provisions of this chapter, except that collected under the provisions of Section 27-65-17(2) shall be deposited by the commission into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35. On or before August 15, 2000, and each succeeding month thereafter, two and two hundred sixty-six one-thousandths percent (2.266%) of the total sales tax revenue collected during the preceding month under the provisions of this chapter, except that collected under the provisions of Section 27-65-17(2), shall be deposited into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35 until such time that the total amount deposited into the fund during a fiscal year equals Forty-two Million Dollars ($42,000,000.00). Thereafter, the amounts diverted under this subsection (7) during the fiscal year in excess of Forty-two Million Dollars ($42,000,000.00) shall be deposited into the Education Enhancement Fund created under Section 37-61-33 for appropriation by the Legislature as other education needs and shall not be subject to the percentage appropriation requirements set forth in Section 37-61-33.

(8) On or before August 15, 1992, and each succeeding month thereafter, nine and seventy-three one-thousandths percent (9.073%) of the total sales tax revenue collected during the preceding month under the provisions of this chapter, except that collected under the provisions of Section 27-65-17(2), shall be deposited into the Education Enhancement Fund created under Section 37-61-33.

(9) On or before August 15, 1994, and each succeeding month thereafter, from the revenue collected under this chapter during the preceding month, Two Hundred Fifty Thousand Dollars ($250,000.00) shall be paid into the State Aid Road Fund.

(10) On or before August 15, 1994, and each succeeding month thereafter through August 15, 1995, from the revenue collected under this chapter during the preceding month, Two Million Dollars ($2,000,000.00) shall be deposited into the Motor Vehicle Ad Valorem Tax Reduction Fund established in Section 27-51-105.

(11) Notwithstanding any other provision of this section to the contrary, on or before February 15, 1995, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under the provisions of Section 27-65-17(2) and the corresponding levy in Section 27-65-23 on the rental or lease of private carriers of passengers and light carriers of property as defined in Section 27-51-101 shall be deposited, without diversion, into the Motor Vehicle Ad Valorem Tax Reduction Fund established in Section 27-51-105.

(12) Notwithstanding any other provision of this section to the contrary, on or before August 15, 1995, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under the provisions of Section 27-65-17(1) on retail sales of private carriers of passengers and light carriers of property, as defined in Section 27-51-101 and the corresponding levy in Section 27-65-23 on the rental or lease of these vehicles, shall be deposited, after diversion, into the Motor Vehicle Ad Valorem Tax Reduction Fund established in Section 27-51-105.

(13) On or before July 15, 1994, and on or before the fifteenth day of each succeeding month thereafter, that portion of the avails of the tax imposed in Section 27-65-22 that is derived from activities held on the Mississippi state fairgrounds complex, shall be paid into a special fund that is created in the State Treasury and shall be expended upon legislative appropriation solely to defray the costs of repairs and renovation at the Trade Mart and Coliseum.

(14) On or before August 15, 1998, and each succeeding month thereafter through July 15, 2005, that portion of the avails of the tax imposed in Section 27-65-23 that is derived from sales by cotton compresses or cotton warehouses and that would otherwise be paid into the General Fund, shall be deposited in an amount not to exceed Two Million Dollars ($2,000,000.00) into the special fund created under Section 69-37-39.

(15) Notwithstanding any other provision of this section to the contrary, on or before September 15, 2000, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under the provisions of Section 27-65-19(1)(f) and (g)(i)2, shall be deposited, without diversion, into the Telecommunications Ad Valorem Tax Reduction Fund established in Section 27-38-7.

(16) On or before August 15, 2000, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under the provisions of this chapter on the gross proceeds of sales of a project as defined in Section 57-30-1 shall be deposited, after all diversions except the diversion provided for in subsection (1) of this section, into the Sales Tax Incentive Fund created in Section 57-30-3.

(17) Notwithstanding any other provision of this section to the contrary, on or before April 15, 2002, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under Section 27-65-23 on sales of parking services of parking garages and lots at airports shall be deposited, without diversion, into the special fund created under Section 27-5-101(d).

(18) On or before August 15, 2007, and each succeeding month thereafter through July 15, 2008, from the sales tax revenue collected during the preceding month under the provisions of this chapter, Two Million Five Hundred Thousand Dollars ($2,500,000.00) shall be deposited into the Special Funds Transfer Fund created in Section 4 of Chapter 556, Laws of 2003.

(19) (a) On or before August 15, 2005, and each succeeding month thereafter, the sales tax revenue collected during the preceding month under the provisions of this chapter on the gross proceeds of sales of a business enterprise located within a redevelopment project area under the provisions of Sections 57-91-1 through 57-91-11, and the revenue collected on the gross proceeds of sales from sales made to a business enterprise located in a redevelopment project area under the provisions of Sections 57-91-1 through 57-91-11 (provided that such sales made to a business enterprise are made on the premises of the business enterprise), shall, except as otherwise provided in this subsection (19), be deposited, after all diversions, into the Redevelopment Project Incentive Fund as created in Section 57-91-9.

(b) For a municipality participating in the Economic Redevelopment Act created in Sections 57-91-1 through 57-91-11, the diversion provided for in subsection (1) of this section attributable to the gross proceeds of sales of a business enterprise located within a redevelopment project area under the provisions of Sections 57-91-1 through 57-91-11, and attributable to the gross proceeds of sales from sales made to a business enterprise located in a redevelopment project area under the provisions of Sections 57-91-1 through 57-91-11 (provided that such sales made to a business enterprise are made on the premises of the business enterprise), shall be deposited into the Redevelopment Project Incentive Fund as created in Section 57-91-9, as follows:

(i) For the first six (6) years in which payments are made to a developer from the Redevelopment Project Incentive Fund, one hundred percent (100%) of the diversion shall be deposited into the fund;

(ii) For the seventh year in which such payments are made to a developer from the Redevelopment Project Incentive Fund, eighty percent (80%) of the diversion shall be deposited into the fund;

(iii) For the eighth year in which such payments are made to a developer from the Redevelopment Project Incentive Fund, seventy percent (70%) of the diversion shall be deposited into the fund;

(iv) For the ninth year in which such payments are made to a developer from the Redevelopment Project Incentive Fund, sixty percent (60%) of the diversion shall be deposited into the fund; and

(v) For the tenth year in which such payments are made to a developer from the Redevelopment Project Incentive Fund, fifty percent (50%) of the funds shall be deposited into the fund.

(20) On or before September 15, 2006, and each succeeding month thereafter, the following amount of sales tax revenue collected during the preceding month under the provisions of this chapter shall be deposited, after all diversions, into the following funds:

(a) Two Million Four Hundred Thousand Dollars ($2,400,000.00) into the Municipal Sales Tax Diversion Fund created under Section 4 of Senate Bill No. 3084, 2006 Regular Session.

(b) One Million Three Hundred Five Thousand Dollars ($1,305,000.00) into the Education Enhancement Fund created under Section 37-61-33.

(c) Three Hundred Twenty-six Thousand Dollars ($326,000.00) into the School Ad Valorem Tax Reduction Fund created under Section 37-61-35.

(21) The remainder of the amounts collected under the provisions of this chapter shall be paid into the State Treasury to the credit of the General Fund.

(22) It shall be the duty of the municipal officials of any municipality that expands its limits, or of any community that incorporates as a municipality, to notify the commissioner of that action thirty (30) days before the effective date. Failure to so notify the commissioner shall cause the municipality to forfeit the revenue that it would have been entitled to receive during this period of time when the commissioner had no knowledge of the action. If any funds have been erroneously disbursed to any municipality or any overpayment of tax is recovered by the taxpayer, the commissioner may make correction and adjust the error or overpayment with the municipality by withholding the necessary funds from any later payment to be made to the municipality.

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. From and after July 1, 2006, 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%).

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, 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. The Legislature declares that the following are the purposes of Sections 10 through 18 of this act:

(a) To recover health care costs to the state imposed by nonsettling manufacturers;

(b) To prevent nonsettling manufacturers from undermining the state's policy of reducing underage smoking by offering their cigarettes for sale substantially below the price of cigarettes of other manufacturers;

(c) To protect funding, which is reduced as a result of the growth of nonsettling-manufacturer cigarette sales, for programs funded in whole or in part by payments to the state under the tobacco settlements referred to in Section 11(e) of this act, and to recoup settlement-payment revenue lost to the state as a result of nonsettling-manufacturer cigarettes sales; and

(d) To fund such other purposes as the Legislature shall determine.

SECTION 11. As used in Sections 10 through 18 of this act, the following terms shall have the meaning ascribed to them herein:

(a) "Commissioner" means the Chairman of the State Tax Commission of the State of Mississippi, and his authorized agents and employees.

(b) "Consumer Price Index" means the Consumer Price Index for All Urban Consumers as published by the Bureau of Labor Statistics of the United States Department of Labor.

(c) "Manufacturer" includes, but is not limited to, an entity that is the first importer into the United States of cigarettes manufactured abroad.

(d) "Master Settlement Agreement" means the settlement agreement entered into on November 23, 1998, by various states and leading cigarette manufacturers.

(e) "Nonsettling manufacturer" means any tobacco product manufacturer that has not entered into the settlement agreements, as amended, in the case of Mike Moore, Attorney General ex rel. State of Mississippi v. The American Tobacco Company et al. (Chancery Court of Jackson County, Mississippi, Cause No. 94-1429).

(f) "Nonsettling-manufacturer cigarettes" means cigarettes manufactured, fabricated, assembled or imported by a nonsettling manufacturer.

(g) "This act" means Sections 10 through 18 of this act.

SECTION 12. (1) There is hereby imposed, levied and assessed a fee for the sale, use, consumption, handling or distribution, in the State of Mississippi, of nonsettling-manufacturer cigarettes to which a stamp is required to be affixed by law. The rate of the fee shall be Two and Three-twentieths Cents (2-3/20) on each cigarette, to be adjusted upward annually each January 1 by the greater of three percent (3%) or the Consumer Price Index applied each year on the previous year, beginning with the year of enactment of this act. The fee is in addition to all other privileges, licenses, fees, or taxes now imposed by law in this state. The commissioner shall collect the fee each month directly from each nonsettling manufacturer based on information received under Section 14 of this act or other information available to the commissioner. Except as otherwise provided in this act, the fee shall be imposed, collected, paid, administered, and enforced in the same manner as the tax on cigarettes assessed by Section 27-69-13.

(2) The revenue derived from the fee imposed under this section shall be deposited into the State General Fund.

SECTION 13. A nonsettling manufacturer whose cigarettes are being offered for sale in this state on July 1, 2006, shall provide to the commissioner the information described in Sections 15 and 16 of this act, and pay the fee imposed by Section 12 of this act by not later than July 31, 2006. If cigarettes of a nonsettling manufacturer are not being offered for sale in this state on July 1, 2006, then the nonsettling manufacturer, before its cigarettes may begin to be offered for sale in this state, shall prepay the fee imposed by Section 12 of this act for the number of cigarettes of the nonsettling manufacturer that the commissioner reasonably projects will be sold in the first calendar month in which cigarettes of the nonsettling manufacturer are sold in this state. The prepayment amount shall be determined by multiplying Two and One-half Cents (2-1/2) times the number of cigarettes that the commissioner reasonably projects that the nonsettling manufacturer will sell in this state in that first calendar month, or Fifty Thousand Dollars ($50,000.00), whichever is more. The commissioner may require a nonsettling manufacturer to provide any information reasonably necessary to determine the fee payment amount and, in the case of prepayment, shall establish regulations providing for reimbursement to nonsettling manufacturers if actual sales are less than sales as projected by the commissioner and for additional payment by nonsettling manufacturers if actual sales are greater than sales as projected by the commissioner.

SECTION 14. Any manufacturer, distributor, or wholesaler of cigarettes required by Section 27-69-35 to file a monthly report shall state, in addition to the information required to be reported under Section 27-69-35, the number and denominations of stamps affixed to individual packages of nonsettling-manufacturer cigarettes, by manufacturer and brand family, sold for each place of business in the month preceding the month in which the report is made, as well as any other information determined by the commissioner to be necessary or appropriate for determining the fee due under Section 12 of this act, or for enforcing any of the provisions of this act. This reporting requirement shall be enforced in the same manner as the monthly reporting requirement imposed by Section 27-69-35.

SECTION 15. Before its cigarettes may begin to be offered for sale in this state, or, if its cigarettes are being offered for sale in this state on July 1, 2006, by not later than July 31, 2006, a nonsettling manufacturer shall provide to the Attorney General, on a form prescribed by the Attorney General, the following information:

(a) The complete name, address and telephone number of the nonsettling manufacturer;

(b) The date that cigarettes of the nonsettling manufacturer began or will begin to be offered for sale in this state;

(c) The names of the brand families of cigarettes of the nonsettling manufacturer that are being or will be offered for sale in this state;

(d) A statement of the nonsettling manufacturer's intention to comply with the obligations imposed by this section; and

(e) The name, address, telephone number and signature of an officer of the nonsettling manufacturer attesting to all of the information described in this section.

The Attorney General shall make information provided pursuant to this section available to the commissioner.

SECTION 16. Each nonsettling manufacturer subject to the fee imposed by Section 12 of this act shall certify to the Attorney General on the first day of each month that it is in compliance with this act and that it has paid in full the fee imposed by Section 12 of this act. The Attorney General shall develop, maintain, and publish on its Internet web site a directory listing all nonsettling manufacturers that have provided current, accurate and complete certifications. The Attorney General shall provide a copy of the list to any person upon request.

SECTION 17. Cigarettes of a nonsettling manufacturer that has not complied with this act, including payment in full of the fee imposed by Section 12 of this act, shall be treated as cigarettes for which the tax assessed by Section 27-69-13 has not been paid, and a nonsettling manufacturer that has not complied with this act shall be subject to any and all of the penalties imposed for violations of Chapter 69, Title 27, Mississippi Code of 1972. A person shall not affix to any package of nonsettling-manufacturer cigarettes the stamp required under Sections 27-69-13 and 27-69-27 after receiving notice from the commissioner, which the commissioner shall provide, that the nonsettling manufacturer of those cigarettes has not paid in full the fee imposed by Section 12 of this act or if the nonsettling manufacturer does not appear on the Attorney General's directory described in Section 16 of this act.

SECTION 18.(1) A person may not transport or cause to be transported from this state cigarettes for sale in another state without first affixing to the cigarettes the stamp required by the state in which the cigarettes are to be sold or paying any other excise tax on the cigarettes imposed by the state in which the cigarettes are to be sold.

(2) A person may not affix to cigarettes the stamp required by another state or pay any other excise tax on the cigarettes imposed by another state if the other state prohibits stamps from being affixed to the cigarettes, prohibits the payment of any other excise tax on the cigarettes, or prohibits the sale of the cigarettes.

(3) On or before the fifteenth day of each month, a person who transports or causes to be transported from this state cigarettes for sale in another state shall submit to the commissioner, on forms prescribed by the commissioner, a report identifying the quantity and brand family of each brand of the cigarettes transported or caused to be transported in the preceding calendar month, and the correct name and address of each recipient of the cigarettes.

(4) For purposes of this section, "person" means an individual, partnership, committee, association, corporation or any other organization or group of persons. Person does not include any common or contract carrier, or public warehouse that is not owned, in whole or in part, directly or indirectly by such person.

SECTION 19. This act shall take effect and be in force from and after July 1, 2006.