LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 17, 2001 TO: Honorable James E. "Pete" Laney, Speaker of the House, House of Representatives FROM: John Keel, Director, Legislative Budget Board IN RE: HB2378 by Kuempel (Relating to the cigarette tax and providing a penalty.), As Passed 2nd House ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** The bill would amend Chapter 154 of the Tax Code. Cigarettes not in compliance with federal laws and regulations relating to ingredients, importation, and previous exportation could not receive a state cigarette tax stamp. Violation of this chapter's provisions regarding the affixing of tax stamps is currently an offense; under this bill the person would have to "knowingly" affix a stamp for an offense to have occurred. The Comptroller would be directed to distribute cigarette tax stamps that would, by the use of numbers or marks, allow the identification of the person applying those tax stamps. Persons importing cigarettes for sale in Texas would have to maintain copies of customs certificates for those cigarettes and submit to the Comptroller, with their monthly report, copies of those customs certificates. The bill would amend Chapter 35 of the Business and Commerce Code by adding a provision allowing cigarette sellers, distributors, and manufacturers sustaining direct economic or commercial injury from the illegal stamping of cigarettes in Texas to bring an action for appropriate injunctive relief, in addition to other remedies provided by law. The bill would amend Chapter 48 of the Penal Code by adding a misdemeanor offense for knowingly importing, acquiring, holding, owning, possessing, or transporting, for sale or distribution in Texas, cigarettes not in compliance with federal laws and regulations and that could not be legally stamped in Texas. An exception would be made for cigarettes imported by an individual for personal use and for cigarettes lawfully sold in duty-free stores. The bill would reinforce existing laws relating to the importation of cigarettes that had been exported by American manufacturers for foreign markets. Such importation of cigarettes is a violation of federal law. Under current state law, tax stamps cannot be applied to cigarettes that do not comply with federal standards for labels and warnings, are labeled in a fashion indicating they were intended for sale outside the U.S., have packages that have been altered, have been imported into the U.S. in violation of federal law after January 1, 2000, or that violate federal trademark or copyright laws. This bill would take effect September 1, 2001. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD