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COMMITTEE REPORT
April 3, 2008
H. 3567
S. Printed 4/3/08--S.
Read the first time May 2, 2007.
To whom was referred a Bill (H. 3567) to amend Section 12-21-620, Code of Laws of South Carolina, 1976, relating to taxation on cigarettes, so as to increase the amount of tax on each, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/ SECTION 1. Article 5, Chapter 21, Title 12 of the 1976 Code is amended by adding:
"Section 12-21-625. (A) Effective July 1, 2008, there is imposed a surtax on cigarettes subject to the tax imposed pursuant to Section 12-21-620(1) in an amount equal to two and one-half cents on each cigarette.
(B) Notwithstanding another provision of law providing for the crediting of the revenues of license or other taxes, the revenue of the surtax imposed pursuant to this section must be credited to the Medicaid Trust Fund.
(C) For all purposes of reporting, payment, collection, and enforcement, the surtax imposed by this section is deemed to be imposed pursuant to Section 12-21-620.
(D) For purposes of this section, "cigarette" means:
(1) any roll for smoking containing tobacco wrapped in paper or in any substance other than a tobacco leaf; or
(2) any roll for smoking containing tobacco, wrapped in any substance, weighing three pounds per thousand or less, however labeled or named, which because of its appearance, size, type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in item (1).
(E) On July 1, 2009, and every year thereafter, the Department of Revenue shall adjust the additional tax imposed pursuant to this section by the average percentage increase for the last three calendar years, if any, in the medical services component of the Consumer Price Index for All Urban Consumers, as certified by the Board of Economic of Advisors."
SECTION 2. Article 1, Chapter 11, Title 11 of the 1976 Code is amended by adding:
"Section 11-11-220. (A) There is created in the State Treasury the Medicaid Trust Fund. This fund is separate and distinct from the general fund of the State and all other funds. Earnings and interest on this fund must be credited to it and any balance in this fund at the end of a fiscal year carries forward in the fund in the succeeding fiscal year. Except as otherwise provided in this section, the State Treasurer shall transfer the funds to the Department of Health and Human Services quarterly.
(B) There is created in the State Treasury the Smoking Prevention and Cessation Trust Fund. This fund is separate and distinct from the general fund of the State and all other funds. Earnings and interest on this fund must be credited to it and any balance in this fund at the end of a fiscal year carries forward in the fund in the succeeding fiscal year. In each fiscal year, the first five million dollars credited to the Medicaid Trust Fund must be transferred to the Smoking Prevention and Cessation Trust Fund. The funds shall be transferred to the Department of Health and Environmental Control to administer a statewide smoking prevention and cessation program."
SECTION 3. Section 12-21-620 of the 1976 Code is amended to read:
"Section 12-21-620. (A) There shall be levied, assessed, collected, and paid in respect to the articles containing tobacco enumerated in this section the following amounts:
(1) upon all cigarettes made of tobacco or any substitute for tobacco, three and one-half mills on each cigarette;
(2) upon all tobacco products, as defined in Section 12-21-800, five percent of the manufacturer's price.
Manufacturer's price as used in this section is the established price at which a manufacturer sells to a wholesaler.
(B) On July 1, 2009, and every year thereafter, the Department of Revenue shall adjust the tax imposed pursuant to subsection (A)(1) by the average percentage increase for the last three completed calendar years, if any, in the medical services component of the Consumer Price Index for All Urban Consumers, as certified by the Board of Economic of Advisors.
(C) As used in this section, "cigarette" means:
(1) any roll for smoking containing tobacco wrapped in paper or in any substance other than a tobacco leaf; or
(2) any roll for smoking containing tobacco, wrapped in any substance, weighing three pounds per thousand or less, however labeled or named, which because of its appearance, size, type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in item (1) of this subsection."
SECTION 4. (A) From the funds transferred to the Department of Health and Human Services from the Medicaid Trust Fund pursuant to Section 11-11-220, the department shall:
(1) set the Low Income Family Program at one hundred percent of the federal poverty level;
(2) set the Aged, Blind, and Disabled Program at one hundred thirty-five percent of the federal poverty level; and
(3) set the State Children's Health Insurance Program at two hundred fifty percent of the federal poverty level.
(B) The programs set forth in subsection (A) are in order of priority. The department may not begin funding a lower prioritized program until the higher prioritized program is fully implemented.
(C) For purposes of this section, 'federal poverty level' means the federal poverty level guidelines published annually by the United States Department of Health and Human Services
SECTION 5. In April, May, and June of 2008, neither a wholesaler, distributor, or a retailer of cigarettes may purchase more cigarettes in any one month in an amount that exceeds one hundred ten percent of the average monthly amount of cigarettes purchased in the same three months of the previous calendar year. In examining aggregate business license tax revenue data, if the Department of Revenue determines that the revenue collected in April, May, and June of 2008 exceeds one hundred ten percent of the amount collected during the same three months of the previous calendar year, the business license tax audit division of the department shall conduct an audit of random wholesalers, distributors, and retailers to ensure compliance with the requirements of this section. Any violation of this section shall result in a civil fine equal to five times the amount of tax owed on the purchased cigarettes that caused the wholesaler, distributor, or retailer to exceed one hundred ten percent of the amount purchased in the same three months of the previous calendar year.
SECTION 6. There is created the Study Committee on Healthcare Access and Affordability. The committee shall review and make recommendations regarding the State's overall health status, the price of healthcare, the use of Medicare and Medicaid, the promotion of public and private healthcare partnerships, preventative care, the establishment of a high risk healthcare pool, the necessity of a reinsurance program, how to maximize coverage while controlling costs and providing quality care, and how to improve the State's overall health and healthcare affordability.
(B) The study committee shall be composed of nine members. The President Pro Tempore of the Senate, the Speaker of the House of Representatives, and the Governor shall each appoint three members, one of which must be upon the recommendation of the Health Sciences South Carolina collaborative. Each member must have a background of substantial duration or expertise in at least one of the following:
(1) healthcare issues;
(2) business issues;
(3) economic issues;
(4) consumer issues;
(5) insurance issues;
(6) academic issues; or
(7) governmental issues.
(C) The study committee shall make a report of its findings and recommendations to the General Assembly no later than January 1, 2010, at which time the study committee must be dissolved.
SECTION 7. Except where otherwise stated, this act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
TO AMEND SECTION 12-21-620, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO TAXATION ON CIGARETTES, SO AS TO INCREASE THE AMOUNT OF TAX ON EACH CIGARETTE FROM THREE AND ONE-HALF MILLS TO TWO CENTS; TO ADD SECTION 44-6-157 SO AS TO PROVIDE THAT THE REVENUE GENERATED FROM THE TAXATION ON CIGARETTES MUST BE USED TO EXPAND MEDICAID COVERAGE TO CHILDREN EIGHTEEN YEARS OF AGE AND YOUNGER WHOSE FAMILY INCOME DOES NOT EXCEED TWO HUNDRED PERCENT OF THE FEDERAL POVERTY LEVEL; AND TO CREATE THE HEALTH CARE TRUST FUND TO PROVIDE MEDICAID BENEFITS TO INDIVIDUALS WHOSE FAMILY INCOME DOES NOT EXCEED ONE HUNDRED PERCENT OF THE FEDERAL POVERTY LEVEL AND WHO ARE UNINSURED AND TO PROVIDE THAT REVENUE IN EXCESS OF THE CHILDREN'S MEDICAID COVERAGE FROM THE CIGARETTE TAX MUST BE CREDITED TO THE HEALTH CARE TRUST FUND; AND TO AMEND SECTION 12-36-910, AS AMENDED, RELATING TO SALES TAXES GENERALLY, SO AS TO PROVIDE THAT AS OF JULY 1, 2009, THE THREE PERCENT SALES TAX IS ELIMINATED ON UNPREPARED FOOD WHICH LAWFULLY MAY BE PURCHASED WITH UNITED STATES DEPARTMENT OF AGRICULTURE FOOD COUPONS, TO PROVIDE FOR CERTAIN GENERAL FUND TRANSFERS TO THE EDUCATION IMPROVEMENT ACT FUND FOR EACH FISCAL YEAR TO OFFSET EIA REVENUES LOST AS A RESULT OF THE LOSS OF SALES TAX ON THE SALE OF UNPREPARED FOOD, AND TO REDUCE THE SALES TAX ON UNPREPARED FOOD TO TWO PERCENT AS OF JULY 1, 2007, AND ONE PERCENT AS OF JULY 1, 2008.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Article 5, Chapter 21, Title 12 of the 1976 Code is amended by adding:
"Section 12-21-625. (A) There is imposed a surtax on cigarettes subject to the tax imposed pursuant to Section 12-21-620(1) in an amount equal to 1.5 cents on each cigarette.
(B) Notwithstanding another provision of law providing for the crediting of the revenues by license or other taxes, the revenue of the surtax imposed by this section must be credited to the Groceries' Sales Tax Relief Fund established pursuant to subsection (C) and used only for the purpose prescribed in subsection (C).
(C)(1) There is created the Groceries' Sales Tax Relief Fund into which must be deposited the revenue of the surtax collected pursuant to subsection (A). The fund must be separate and distinct from the general fund and may be used only for the purpose prescribed in this subsection. Earnings on investments from this fund must remain part of the separate fund and must not be deposited in the general fund, except as otherwise provided in this subsection.
(2) Monies in the fund must be used to reduce the state sales and use tax imposed on the gross proceeds of the sale or sales price of unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons.
(3) Monies in the fund must be transferred by the State Treasurer to the general fund each fiscal year in the amount estimated by the Board of Economic Advisors to equal revenue not received as a result of the reduction of the sales and use tax on unprepared food as provided in this subsection.
(4) Monies not expended from the fund during a fiscal year must be carried forward to the succeeding fiscal year and used for the same purpose.
(D) For all purposes of reporting, payment, collection, and enforcement, the surtax imposed by this section is deemed to be imposed pursuant to Section 12-21-620."
SECTION 2. Section 12-36-910(D) of the 1976 Code, as added by Act 388 of 2006, is amended to read:
"(D)(1) Notwithstanding the rate of the tax imposed pursuant to subsection (A) of this section or the rate of any other sales tax imposed pursuant to this chapter and the rate of any use tax imposed pursuant to this chapter, the sales and use tax on the gross proceeds of sales or sales price of unprepared food which lawfully may be purchased with United States Department of Agriculture food coupons is three one and four-tenths percent.
(2) There is transferred from the general fund of the State to the EIA Fund in fiscal year 2007-2008 the revenue estimated by the Board of Economic Advisors to equal EIA revenue not received as a result of the two one and six-tenths percent sales tax differential provided pursuant to this subsection (D)(1).
(3) Notwithstanding the rate of the tax imposed pursuant to subsection (D)(1), the sales and use tax on the gross proceeds of sales or sales price of unprepared food which lawfully may be purchased with United States Department of Agriculture food coupons is reduced to one and four-tenths percent effective January 1, 2008. There is transferred from the general fund of the State to the EIA Fund the revenue estimated by the Board of Economic Advisors to equal EIA revenue not received as a result of the loss of this sales tax revenue."
SECTION 3.A. Section 12-21-750 of the 1976 Code is amended to read:
"Section 12-21-750. All A retail dealers dealer in manufactured tobacco products, shells, cartridges or playing cards purchasing or receiving such the commodities from without the State, whether they shall have been ordered through a wholesaler or jobber in this State, by drop shipment or otherwise, shall, within five days after receipt of them, shall mail a duplicate invoice of all such the purchases or receipts to the department. Failure to furnish duplicate invoices as required shall be is a misdemeanor and, upon conviction, be is punishable by a fine of not more than one hundred dollars for each offense or imprisonment for a period not exceeding thirty days."
B. Section 12-21-770 of the 1976 Code is amended to read:
"Section 12-21-770. Every Any person, firm, corporation, club, or association who sells, stores, or receives for the purpose of distribution to any person, firm, corporation, club, or association any shotgun or other shells, cartridges, manufactured tobacco products or playing cards otherwise taxable under pursuant to the provisions of this chapter shall must pay the tax at the rates provided in this article for the sale of such articles those products."
SECTION 4. Article 5, Chapter 21, Title 12 of the 1976 Code is amended by adding:
"Section 12-21-627. Notwithstanding any other provision of law providing for the crediting and use of the revenues of the license tax on tobacco products, in any fiscal year that the license tax on cigarettes is greater than seven cents a pack, the General Assembly shall appropriate one million dollars in the annual general appropriations act to the Department of Agriculture for research and promotion of healthy lifestyles with food grown in this State."
SECTION 5. This act takes effect January 1, 2008.
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