HB318: relative to a tax on premium cigars.

HB 318-FN-A - AS INTRODUCED

2017 SESSION

17-0478

09/10

HOUSE BILL 318-FN-A

AN ACT relative to a tax on premium cigars.

SPONSORS: Rep. Horrigan, Straf. 6

COMMITTEE: Ways and Means

ANALYSIS

This bill imposes a tax on premium cigars.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

17-0478

09/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seventeen

AN ACT relative to a tax on premium cigars.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Tax on Tobacco Products Other Than Cigarettes and Tax on Premium Cigars. Amend RSA 78:7-c to read as follows:

78:7-c Tax Imposed on Tobacco Products Other Than Cigarettes. A tax upon the retail consumer is hereby imposed on tobacco products other than cigarettes at a rate of 65.03 percent of the wholesale sales price and on premium cigars at a rate of 15 percent of the wholesale sales price. The tax under this section may be rounded to the nearest cent if the commissioner determines that the amount of tax would not thereby be made materially disproportionate. No such tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States. [No such tax shall be imposed on premium cigars.]

2 Effective Date. This act shall take effect July 1, 2017.

LBAO 17-0478

12/30/16

HB 318-FN-A- FISCAL NOTE

AS INTRODUCED

AN ACT relative to a tax on premium cigars.

FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None

Estimated Increase / (Decrease)

STATE:

FY 2018

FY 2019

FY 2020

FY 2021

Appropriation

$0

$0

$0

$0

Revenue

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Expenditures

$0

$0

$0

$0

Funding Source:

[ X ] General [ X ] Education [ ] Highway [ ] Other

METHODOLOGY:

This bill imposes a tax on premium cigars at a rate of 15 percent of the wholesale sales price. Premium cigars are defined as cigars that are made entirely by hand of all natural tobacco leaf; hand constructed and hand wrapped; weigh more than 3 pounds per 1,000 cigars; and are kept in a humidor. The Department of Revenue Administration states it would need to update all tax forms and electronic management systems related to taxing premium cigars. The Department indicates it can make the necessary changes/updates with no additional expenditures. The Department does not have complete data on the sale of premium cigars currently excluded from the tobacco tax to determine the increase in general fund and education trust fund revenue. The Department indicates wholesalers who sell tobacco products other than premium cigars are required to file a monthly return that reports both the sale of taxable and non-taxable premium cigars. For FY 2016 these wholesalers reported sales of $524,786 of premium cigars. If a seller only sells premium cigars and no other tobacco products, no report of sales is made to the Department. Based on the reports filed with the Department by wholesalers selling tobacco products other than premium cigars for FY 2016, if premium cigars had been taxed at a rate of 15% of the wholesale price, the minimum increase in tobacco tax revenue would be $78,718.

AGENCIES CONTACTED:

Department of Revenue Administration