CS/CS/SB 1840--Protecting health/surcharge on tobacco products.

This bill levies a $1 per pack surcharge on cigarettes. Revenue from the surcharge will be deposited in the Health Care Trust Fund in the Agency for Health Care Administration. Tobacco products other than cigarettes and cigars are subject to a surcharge equal to 60 percent of the wholesale sales price. (This is the price that the distributor pays the manufacturer.) This is in addition to the current tax of 25 percent of the wholesale sales price. The surcharge is levied on cigarettes and other tobacco products in inventory in the state on July 1, 2009. To compensate for costs of taking this inventory, retailers, distributors, wholesalers, and manufacturers will get a 5 percent collection allowance for the surcharge on inventory. The bill provides for regulation of internet and mail-order sales of cigarettes and other tobacco products to ensure that these products are not available to minors. It increases the penalties related to untaxed cigarettes, and creates a toll-free number for cigarette tax and surcharge violations to be reported. An informer may receive a reward for a report that leads to a fine being levied and paid. The bill also restricts the amount of tax-free cigarettes available to the recognized Indian tribes. Members of the tribes will be able to buy and consume cigarettes tax free on the reservations, but will not be able to sell untaxed cigarettes to non-Indians. It provides for the option of entering into an agreement with the state to share cigarette tax revenue for cigarettes sold on reservations, but the state must, at a minimum, receive all revenue from the surcharge created in this bill. These provisions were approved by the Governor and take effect July 1, 2009. Ch. 09-79, L.O.F.