HBA-AMW H.B. 3256 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3256 By: Davis, Yvonne Ways & Means 4/1/2001 Introduced BACKGROUND AND PURPOSE Most excise tax rates, such as the rates on alcohol, are determined by volume or weight, however, taxes on smokeless tobacco are based on the manufacturer's list price. Currently, certain types of smokeless tobacco are considered premium products and have a higher manufacturer's list price. The quality of premium and non premium tobacco products is essentially comparable. However, premium smokeless tobacco producers are required to remit a higher tax to the comptroller of public accounts (comptroller). House Bill 3256 modifies the standards by which taxes are assessed for smokeless tobacco products, clarifies provisions regarding the preservation of the separate entity concept in the franchise tax, and clarifies existing law regarding taxes levied on certain insurance organizations. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 3256 amends the Tax Code to establish the tax rate for each can or package of moist snuff, dry snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco and to provide criteria for computing the total tax for these products. The bill requires an ambiguity regarding the proper classification of a tobacco product for taxation purposes to be resolved by reference to the classification of the tobacco product for federal tobacco tax purposes (Sec. 155.0211). The bill provides that records of purchase or receipt, distributor and wholesaler reports of sale or use, manufacturer's records and reports, and distributor's reports filed with the comptroller of public accounts must show the net weight as listed by the manufacturer for each unit and the aggregate net weight of moist snuff, dry snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco listed on each invoice (Secs. 155.101, 155.102, 155.103, 155.111). The bill exempts from the franchise tax an insurance organization, title insurance company, or title insurance agent authorized to engage in insurance business in this state now required to pay an annual tax under the provisions regarding taxes and fees or the Texas Title Insurance Act (Sec. 171.052). The bill also provides that a business loss can be carried forward only by the corporation that incurred the loss and cannot be transferred to or claimed by any other entity, including the survivor of a merger if the loss was incurred by the corporation that did not survive the merger (Sec. 171.110) The bill amends the Tax and Insurance codes to clarify existing law regarding taxes levied on insurance companies authorized to do business in this state (Arts. 4.01, 4.06, 9.59, and SECTION 13). The bill repeals law relating to exceptions to provisions prohibiting occupational taxes to be levied on insurance companies and the limitation of collectible taxes (SECTION 12). EFFECTIVE DATE September 1, 2001.