Date: 02/25/2009
Final
BILL SUMMARY for HB09-1173
HOUSE COMMITTEE ON FINANCE
| Votes: View--> | Action Taken: |
Moved amendment L.002. The motion passed on a 8-3
Refer House Bill 09-1173, as amended, to the Commi | PASS
PASS |
01:34 PM -- House Bill 09-1173 - Concerning Contraband Tobacco Products
Representative Riesberg, prime sponsor, explained the provisions of the bill and distributed amendment L.002 (Attachment A), a new article on counterfeit cigarettes (Attachment B), and a letter from the Colorado Association of Distributors (Attachment C). Representative Riesberg noted that House Bill 09-1173 establishes means to reduce the amount of contraband tobacco products entering the state. He continued saying the bill: clarifies that the definition of a "wholesaler" includes any person or entity outside of Colorado that is engaged in the business of selling and shipping cigarettes directly to consumers in Colorado; requires any person or entity in possession of untaxed cigarettes or tobacco products to pay the tax on behalf of the wholesaler or distributor; establishes a civil penalty for failure to pay the tax of up to 500 percent of the payment in addition to the tax owed; requires fine revenue to be deposited in the Tobacco Tax Enforcement Cash Fund for use by the Department of Revenue to enforce the bill; and requires every retailer that is not a licensed distributor to keep records related to the tobacco products it has received and to provide the records to the Department of Revenue upon request.
Representative Riesberg continued by saying that any person who knowingly possesses cigarettes that are not approved for stamping and sale in the departments' directory is subject to a civil penalty of between $100 and $1,000 for the first violation, depending on the quantity of cigarettes in the person's possession. The fine is doubled for the second violation, and tripled for the third or subsequent violation. He continued by saying that fine revenue is to be deposited in the Tobacco Tax Enforcement Cash Fund.
Representative Riesberg discussed the fiscal note and said that for the sale of cigarettes or other tobacco products to a consumer through an internet, telephone, or mail-order transaction, the bill requires the seller to obtain certain information from the consumer. Persons and entities that ship cigarettes or other tobacco products to any person other than a licensed wholesaler or distributor are required to report information about the shipment to the department.
The committee discussed the department's treatment of contraband cigarettes. Representative Riesberg said that the bill provides that rather than the destruction of the tobacco products, a tax could be paid to the department and thus, would allow the contraband cigarettes to still be sold, but for a profit that is reduced by the state taxes owed.
The following persons testified:
01:52 PM -- Mr. Wilson Croom, Colorado Association of Distributors Inc., testified in support of the bill.
02:01 PM -- Mr. Chip Creager, Creager Mercantile, testified in support of the legislation. Mr. Creager discussed the audit process that applies to retailers who sell cigarettes. He closed by saying that 3 percent to 4 percent of all tobacco consumed in Colorado is purchased on the black market.
02:09 PM -- Ms. Mary Szarmach, Smoker Friendly, testified in support of the bill and noted that the bill will level the playing field between cigarette retailers and black market sellers. Given the recent passage of the federal State Children's Health Insurance Program (SCHIP) tax increase of 62 cents, there will be an increase in black market cigarette sales. She closed by saying that catalog and Internet sales also account for a large part of the cigarettes purchased in Colorado.
02:16 PM -- Mr. Grier Bailey, Colorado Wyoming Petroleum Marketers Association, testified in support of the bill.
02:19 PM -- Mr. Harry Zeid, Legislative Council Staff, responded to questions about the fiscal note and the 6.5 FTE required to enforce the provisions of the bill. The committee discussed some of the cash fund balances in the bill's fiscal note.
02:44 PM -- Mr. Ruben Valdez, PhilipMorris USA, testified in support of the bill.
02:51 PM -- Mr. Phillip Horwitz, Colorado Department of Revenue, responded to committee questions and discussed the FTE for enforcement of the bill. The committee engaged in a brief discussion on the Internet sales of cigarettes and other tobacco products.
03:06 PM
The bill was placed on the table for action and amendment L.002 was discussed.
 | |
| BILL: | HB09-1173 | |
| TIME: | 03:07:05 PM |
| MOVED: | Benefield |
| MOTION: | Moved amendment L.002. The motion passed on a 8-3 vote. |
| SECONDED: | Frangas |
| VOTE |
| Apuan | Yes |
| Benefield | Yes |
| Gerou | Yes |
| Kefalas | Yes |
| Kerr A. | Yes |
| Lambert | No |
| Roberts | No |
| Summers | Yes |
| Swalm | No |
| Frangas | Yes |
| Judd | Yes |
| | |
Not Final YES: 8 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS |
| |
| BILL: | HB09-1173 | |
| TIME: | 03:14:43 PM |
| MOVED: | Frangas |
| MOTION: | Refer House Bill 09-1173, as amended, to the Committee on Appropriations. The motion passed on a 6-5 vote. |
| SECONDED: | Benefield |
| VOTE |
| Apuan | Yes |
| Benefield | Yes |
| Gerou | No |
| Kefalas | Yes |
| Kerr A. | Yes |
| Lambert | No |
| Roberts | No |
| Summers | No |
| Swalm | No |
| Frangas | Yes |
| Judd | Yes |
| | |
Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS |
03:23 PM
Recess.