83R9671 KLA-D

By: Davis S.B. No. 934

A BILL TO BE ENTITLED

AN ACT

relating to increasing or decreasing at the rate of inflation the rates of taxes imposed on cigarettes, cigars, and other tobacco products.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 154.021, Tax Code, is amended by amending Subsection (b) and adding Subsections (c), (d), and (e) to read as follows:

(b) Subject to Subsection (c), the [The] tax rates are:

(1) $70.50 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.

(c) In this subsection, "consumer price index" means the annual revised Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, seasonally adjusted, as published by the federal Bureau of Labor Statistics of the United States Department of Labor, or its successor in function. On September 1 of each year, the tax rates prescribed by this section that were in effect on August 31 of that year are each increased or decreased by a percentage equal to the percentage change in the most recent consumer price index, and the resulting amount is rounded to the nearest cent, except that:

(1) if that percentage increase or decrease in the most recent consumer price index is more than three percent, the tax rate is increased or decreased, as applicable, by a maximum of three percent, and the resulting amount is rounded to the nearest cent; and

(2) if the computation otherwise required by this subsection would result in a tax rate that is less than the rate prescribed by Subsection (b), the tax rate is the rate prescribed by that subsection.

(d) Not later than July 31 of each year, the comptroller shall:

(1) compute in accordance with Subsection (c) the tax rates that will apply in the succeeding state fiscal year; and

(2) publish the computed rates on the comptroller's Internet website.

(e) The comptroller may adopt any rules necessary for the implementation of Subsections (c) and (d).

SECTION 2. Section 155.021(b), Tax Code, is amended to read as follows:

(b) Subject to Section 155.0212, the [The] tax rates are:

(1) one cent per 10 or fraction of 10 on cigars weighing three pounds or less per thousand;

(2) $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) $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) $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 3. Section 155.0211(b), Tax Code, is amended to read as follows:

(b) Subject to Section 155.0212, and except [Except] as provided by Subsection (c), the tax rate for each can or package of a tobacco product other than cigars is $1.22 per ounce and a proportionate rate on all fractional parts of an ounce.

SECTION 4. Subchapter B, Chapter 155, Tax Code, is amended by adding Section 155.0212 to read as follows:

Sec. 155.0212. ANNUAL ADJUSTMENT OF RATES. (a) In this section, "consumer price index" means the annual revised Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, seasonally adjusted, as published by the federal Bureau of Labor Statistics of the United States Department of Labor, or its successor in function.

(b) On September 1 of each year, the tax rates prescribed by Sections 155.021 and 155.0211 that were in effect on August 31 of that year are each increased or decreased by a percentage equal to the percentage change in the most recent consumer price index, and the resulting amount is rounded to the nearest cent, except that:

(1) if that percentage increase or decrease in the most recent consumer price index is more than three percent, the tax rate is increased or decreased, as applicable, by a maximum of three percent, and the resulting amount is rounded to the nearest cent; and

(2) if the computation otherwise required by this subsection would result in a tax rate that is less than the rate prescribed by Section 155.021 or 155.0211, as applicable, the tax rate is the rate prescribed by the applicable section.

(c) Not later than July 31 of each year, the comptroller shall:

(1) compute in accordance with Subsection (b) the tax rates that will apply in the succeeding state fiscal year; and

(2) publish the computed rates on the comptroller's Internet website.

(d) The comptroller may adopt any rules necessary for the implementation of Subsections (b) and (c).

SECTION 5. (a) As soon as possible after the effective date of this Act, the comptroller of public accounts shall:

(1) make the initial computations and determine the tax rates that apply beginning September 1, 2013, in accordance with:

(A) Section 154.021, Tax Code, as amended by this Act; and

(B) Section 155.0212, Tax Code, as added by this Act, except as provided by Subsection (b) of this section; and

(2) publish on the comptroller's Internet website the tax rates computed under Subdivision (1) of this subsection that will apply beginning September 1, 2013.

(b) Not later than July 31, 2014, the comptroller of public accounts shall make the initial computation under Section 155.0212, Tax Code, as added by this Act, with respect to the tax rate described by Section 155.0211(b), Tax Code, as amended by this Act, and determine the tax rate that will apply under that section beginning September 1, 2014.

SECTION 6. The changes in law made by this Act apply only to a tax imposed on or after September 1, 2013. A tax imposed before that date is governed by the law in effect on the date the tax was imposed, and the former law is continued in effect for that purpose.

SECTION 7. The changes in law made by this Act do not affect tax liability accruing before September 1, 2013. That liability continues in effect as if this Act had not been enacted, and the former law is continued in effect for the collection of taxes due and for civil and criminal enforcement of the liability for those taxes.

SECTION 8. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect on the 91st day after the last day of the legislative session.