House Bill 1630

AN ACT TO AMEND SECTIONS 27-70-3 AND 27-70-5, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE TOBACCO EQUITY TAX ON CIGARETTES, FORMERLY KNOWN AS THE NONSETTLING-MANUFACTURER CIGARETTE FEE, DOES NOT APPLY TO CIGARETTES OR TOBACCO SOLD BY AN ENTITY THAT IS A SUBSEQUENT PARTICIPATING MANUFACTURER, FOR PURPOSES OF PARTICIPATING IN THE ORIGINAL TOBACCO SETTLEMENT AGREEMENT, UNTIL A CERTAIN DESCRIBED CREDIT AMENDMENT HAS BEEN MADE A PART OF THE MASTER SETTLEMENT AGREEMENT; TO SET FORTH ADDITIONAL DEFINITIONS; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 27-70-3, Mississippi Code of 1972, is amended as follows:

27-70-3. As used in this chapter:

(a) "Brand family" means each style of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers, including "menthol," "lights," "kings" and "100s." The term includes any style of cigarette products that has a brand name, trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or other indication of product identification that is identical to, similar to, or identifiable with a previously known brand of cigarettes.

(b) "Cigarette" means any product that contains nicotine and is intended to be burned or heated under ordinary conditions of use. The term includes:

(i) A roll of tobacco wrapped in paper or another substance that does not contain tobacco;

(ii) Tobacco, in any form, that is functional in a product that, because of the product's appearance, the type of tobacco used in the filler, or the product's packaging and labeling, is likely to be offered to or purchased by a consumer as a cigarette; or

(iii) A roll of tobacco wrapped in any substance containing tobacco that, because of the product's appearance, the type of tobacco used in the filler, or the product's packaging and labeling, is likely to be offered to or purchased by a consumer as a cigarette.

(c) "Commissioner" means the Commissioner of Revenue of the Department of Revenue and his authorized agents and employees. (d) "Mail" means placing the document or item referred to in first-class United States mail, postage prepaid, addressed to the person to whom the document or item is to be sent at the last known address of that person.

(e) "Manufacturer" means a person that manufactures, fabricates or assembles cigarettes for sale or distribution. For purposes of this chapter, the term includes a person that is the first importer into the United States of cigarettes manufactured outside the United States.

(f) "Tobacco settlement agreement" means any settlement agreement entered into by this state and one or more cigarette manufacturers 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, and all subsequent amendments thereto.

(g) "Distributor" shall have the same meaning ascribed to that term in Section 27-69-3.

(h) "Credit amendment" means an amendment to the master settlement agreement that offers a credit to a subsequent participating manufacturer for taxes paid under this chapter with respect to their products in a form agreed upon by:

(i) Settling states that have aggregate allocable shares equal to at least ninety-nine and nine hundred thirty-seven thousand forty-nine one-millionths percent (99.937049%);

(ii) The original participating manufacturers; and

(iii) Subsequent participating manufacturers that would otherwise be required to pay the tax imposed under this chapter whose aggregate market share, expressed as a percentage, of the total number of individual cigarettes sold in the United States, the District of Columbia and Puerto Rico during the calendar year at issue is greater than three and one-half percent (3-1/2%). For purposes of this subparagraph (iii), the aggregate market share is measured by the excise taxes collected by the United States government, except that in the case of cigarettes sold in Puerto Rico, the aggregate market share is measured by the "arbitrios de cigarillos" collected by the Puerto Rico taxing authority. For purposes of the calculation of a subsequent participating manufacturer's aggregate market share under this subparagraph (iii), nine one-hundredths (0.09) ounce of a roll of tobacco shall constitute one (1) individual cigarette.

For purposes of this paragraph (h), the terms "settling states," "aggregate allocable shares," "original settling manufacturers" and "subsequent participating manufacturer" shall have the meanings ascribed to them in the master settlement agreement.

(i) "Master settlement agreement" means the settlement agreement and related documents entered into on November 23, 1998, by forty-six (46) states and leading United States tobacco manufacturers, as amended through the effective date of this act.

SECTION 2. Section 27-70-5, Mississippi Code of 1972, is amended as follows:

27-70-5. (1) (a) In addition to the tax imposed under Section 27-69-13, and except as provided by subsection (2) of this section, there is imposed a tobacco equity tax in the amount of One and Thirty-five One Hundredths Cent ($0.0135) per cigarette on all cigarettes subject to the tax imposed under Section 27-69-13.

(b) On July 1 of each year, the tax prescribed by subsection (1) of this section shall increase by the greater of:

(i) Three percent (3%); or

(ii) The percentage increase in the most recent annual revised Consumer Price Index for all Urban Consumers, as published by the Federal Bureau of Labor Statistics of the United States Department of Labor.

(d) The cigarettes manufactured by any manufacturer which is a party to the tobacco settlement agreement shall be exempt from the imposition of the tobacco equity tax provided for herein.

(2) (a) The tax imposed by this chapter does not apply to cigarettes that are sold, purchased or otherwise distributed in this state for sale outside of this state. A person may not transport or cause to be transported from this state such cigarettes for retail 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 by paying any other excise tax on the cigarettes imposed by the state in which the cigarettes are to be sold; however, a person shall not be required to affix a tax stamp of another state or pay the excise tax of another state prior to transporting the cigarettes out of this state if the other state prohibits that action or if the cigarettes are being sold to a wholesaler licensed by that state.

(b) The tax imposed by this chapter does not apply to cigarettes or tobacco sold by a subsequent participating manufacturer, until the effective date of a credit amendment to that agreement.

(3) The tax imposed by this chapter is in addition to any other privilege, license, fee, assessment or tax required or imposed by state law, including, but not limited to, the taxes levied by Section 27-69-13.

(4) The tax imposed by this chapter is imposed, levied and assessed on each distributor of cigarettes. The tax shall be due and payable on or before the fifteenth day of the month next succeeding the month in which the stamp is required to be affixed to the cigarettes under the Tobacco Tax Law. The distributor shall make a return showing the number of such cigarettes, the brand family, and the manufacturer. The return shall also include the quantity of cigarettes, by brand family, transported or caused to be transported outside of Mississippi in the preceding month as well as the name and address of the recipient of the cigarettes transported outside of Mississippi.

(5) The distributor is eligible for a credit if cigarettes for which the distributor had previously paid the tax under this chapter were returned to the distributor.

SECTION 3. This act shall take effect and be in force from and after July 1, 2012.