SRC-LBB C.S.H.B. 3141 78(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 3141
78R17687 DAK-FBy: Wilson (Armbrister)
Business & Commerce
5/22/2003
Committee Report (Substituted)


DIGEST AND PURPOSE 

In 1997, Texas, along with four other states, agreed to individual state
tobacco settlements.  By 1998 the remaining states had joined into a
Master Settlement Agreement (MSA) that calculated the tobacco settlement
payments to the states. These payments were based on the total nationwide
sales by cigarette manufacturers that are parties to the agreement.
However, sales by manufacturers that are not parties to the agreement, or
nonparticipating manufacturers (NPM), do not result in payments to the
states.   

Since 1998 the 46 MSA states have required those NPM's that refused to
sign the MSA to instead escrow funds that could be used to satisfy the
judgments that might be entered against them in lawsuits brought by the
states.  

Some NPMs attempt to evade making these escrow payments by using the four
non-escrow states, Mississippi, Florida, Minnesota and Texas as a first
point of shipment.  They will then ship the product to other states and as
they do not make escrow payments, they are able to sell the product at a
substantially lower price.  Companies that comply with the state
requirements often have reduced sales due to these illegal practices.
This in turn costs the State of Texas settlement money. 

C.S.H.B. 3141 prohibits a person from transporting or causing to be
transported from this state cigarettes for 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 paying any other excise tax on the
cigarettes imposed by the state in which the cigarettes are to be sold. 

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 154.152, Tax Code, by adding Subsections (c),
(d), and (e),  as follows: 

(c)  Prohibits a person from transporting or causing to be transported
from this state cigarettes for 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 paying any other excise tax on the cigarettes
imposed by the state in which the cigarettes are to be sold. 

(d)  Prohibits a person from affixing to cigarettes the stamp required by
another state or paying any other excise tax on the cigarettes imposed by
another state if the other state prohibits stamps from being affixed to
the cigarettes, prohibits the payment of any other excise tax on the
cigarettes, or prohibits the sale of the cigarettes. 

 (e)  Requires a person who transports or causes to be transported from
this state cigarettes  for sale in another state to submit to the attorney
general, not later than the 15th day after the end of each calendar
quarter, a report identifying: 

 (1)  the quantity of cigarettes, by brand style, transported or caused to
be transported in the preceding calendar quarter; and 

  (2)  the name and address of each recipient of the cigarettes.

SECTION 2.  Effective date:  upon passage or September 1, 2003.