SRC-JXG S.B. 1253 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1253
76R6006 CBH-DBy: West
Finance
4/26/1999
As Filed


DIGEST 

Currently, Texas law allows travelers to bring one carton of cigarettes per
day per person across the border, free of tax. The second carton of
cigarettes and subsequent cartons are taxed $0.41 per cigarette pack, or
$4.10 per cigarette carton. The amount of tax-free cigarettes imported from
Mexico into Texas is a considerable number, which hurts Texas retailers,
because they cannot compete with the price of cigarettes sold across the
border. The state tax of $4.10 per carton is not collected on the first
carton and export cigarettes sell for approximately $5.00 less than
domestic cartons. Additionally, the settlement between Texas and tobacco
manufacturers uses only the sales of domestic cigarettes in the formula to
determine how much money the state will receive each year. Every pack sold
into Mexico and brought back into Texas displaces a domestic sale, and
deprives the state of revenue it should receive under the tobacco
settlement, because cigarettes sold for export are included in this
determination. Texas could earn additional revenue, if all cigarettes
brought into Texas were taxed. Preliminary estimates by the state auditor's
office indicate that if half of the estimated smokers who cross the border
cross with a tax-free carton of cigarettes, additional revenue of
approximately $17 million could be earned by taxing each cigarette carton.
S.B. 1253 would require a person who imports a carton of cigarettes or less
to pay the state tax of $0.41 per cigarette pack, or $4.10 per cigarette
carton. 

PURPOSE

As proposed, S.B. 1253 requires a person to pay a cigarette tax of $0.41
per pack or $4.10 per carton.  

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 154.024(a), Tax Code, to provide that a person
who imports and personally transports 200 or fewer cigarettes into this
state from another state is not required to pay the tax imposed by this
chapter if the person uses the cigarettes and does not sell them or offer
them for sale. Requires a person who imports and personally transports 200
or fewer cigarettes into this state from a foreign country to pay the tax
imposed by this chapter and have affixed on each individual package of
cigarettes a stamp to show payment of the tax. 

SECTION 2. Amends Section 154.511, Tax Code, to provide that a person,
other than a common carrier, commits an offense if the person knowingly
transports cigarettes without a stamp affixed to each individual package,
except as provided by Section 154.024(a).  

SECTION 3. Effective date: September 1, 1999.
           Makes application of this Act prospective.

SECTION 4. Emergency clause.