78R5556 CBH-D

By:  Griggs                                                       H.B. No. 1603



A BILL TO BE ENTITLED

AN ACT

relating to increases in the tax on cigarettes and other tobacco 
products and to the allocation of those increases to the foundation 
school fund.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 154.021(b), Tax Code, is amended to read 
as follows:     
	(b)  The tax rates are:                                                        
		(1)  $70.50 [$20.50] per thousand on cigarettes 
weighing three pounds or less per thousand; and
		(2)  the rate provided by Subdivision (1) plus $2.10 
per thousand on cigarettes weighing more than three pounds per 
thousand.
	SECTION 2.  Section 154.603, Tax Code, is amended to read as 
follows:        
	Sec. 154.603.  DISPOSITION OF REVENUE.  (a)  After the 
deductions for the purposes provided by Section 154.602 [of this 
code], the revenue remaining of the first $2 of tax received per 
1,000 cigarettes for cigarettes weighing three pounds or less per 
thousand and the first $4.10 per 1,000 cigarettes of the tax 
received for cigarettes weighing more than three pounds per 
thousand is allocated:
		(1)  18.75 percent to the foundation school fund; and                         
		(2)  81.25 percent to the general revenue fund.                               
	(b)  The revenue remaining after the deductions for the 
purposes provided by Section 154.602 [of this code] and allocation 
under Subsection (a) of the next $18.50 of tax received per 1,000 
cigarettes for cigarettes weighing three pounds or less per 
thousand and the next $18.50 per 1,000 cigarettes of the tax 
received for cigarettes weighing more than three pounds per 
thousand [this section] is allocated to the general revenue fund.
	(c)  The revenue remaining after the deductions for the 
purposes provided by Section 154.602 and allocation under 
Subsections (a) and (b) shall be deposited to the credit of the 
foundation school fund.
	SECTION 3.  Section 155.021(b), Tax Code, is amended to read 
as follows:     
	(b)  The tax rates are:                                                        
		(1)  3.44 cents [one cent] per 10 or fraction of 10 on 
cigars weighing three pounds or less per thousand;
		(2)  $25.80 [$7.50] per thousand on cigars that:      
			(A)  weigh more than three pounds per thousand; 
and                        
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for 3.3 cents or less 
each;
		(3)  $37.84 [$11] per thousand on cigars that:        
			(A)  weigh more than three pounds per thousand;                              
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for more than 3.3 cents 
each;  and
			(C)  contain no substantial amount of nontobacco 
ingredients; and          
		(4)  $51.60 [$15] per thousand on cigars that:        
			(A)  weigh more than three pounds per thousand;                              
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for more than 3.3 cents 
each;  and
			(C)  contain a substantial amount of nontobacco 
ingredients.               
	SECTION 4.  Section 155.0211(b), Tax Code, is amended to 
read as follows:    
	(b)  The tax rate for tobacco products other than cigars is 
121 [35.213] percent of the manufacturer's list price, exclusive of 
any trade discount, special discount, or deal.
	SECTION 5.  Section 155.241, Tax Code, is amended to read as 
follows:        
	Sec. 155.241.  ALLOCATION OF TAX.  (a)  Revenue collected 
under this chapter at the following rates shall be deposited to the 
credit of the general revenue fund:
		(1)  the revenue from the first one cent per 10 or 
fraction of 10 on cigars weighing three pounds or less per thousand;
		(2)  the revenue from the first $7.50 per thousand on 
cigars that:   
			(A)  weigh more than three pounds per thousand; 
and                 
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for 3.3 cents or less 
each;
		(3)  the revenue from the first $11 per thousand on 
cigars that:     
			(A)  weigh more than three pounds per thousand;                       
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for more than 3.3 cents 
each; and
			(C)  contain no substantial amount of nontobacco 
ingredients;       
		(4)  the revenue from the first $15 per thousand on 
cigars that:     
			(A)  weigh more than three pounds per thousand;                       
			(B)  sell at factory list price, exclusive of any 
trade discount, special discount, or deal, for more than 3.3 cents 
each; and
			(C)  contain a substantial amount of nontobacco 
ingredients; and    
		(5)  the revenue from the tax on tobacco products other 
than cigars imposed at the rate of 35.213 percent of the 
manufacturer's list price, exclusive of any trade discount, special 
discount, or deal.
	(b)  The revenue remaining after the allocation under 
Subsection (a) shall be deposited to the credit of the foundation 
school fund.
	SECTION 6.  This Act takes effect September 1, 2003.