HBA-JLV H.B. 3650 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3650
By: Thompson
Ways and Means
4/4/2001
Introduced



BACKGROUND AND PURPOSE 

Current state tax on other tobacco products (OTP) is levied at 35.213
percent of the manufacturer's list price and the tax is imposed when the
permit holder receives OTPs for the purpose of making a first sale. Due to
the marketing practices of some tobacco companies, ambiguities have
developed regarding the manufacturer's list price and what constitutes the
purpose of making a first sale.  House Bill 3650 defines the purchase price
of OTPs, shifts the payment of the tax from the permit holder to the
distributor, and increases the levied tax to a 40 percent tax levied on the
purchase price paid by the distributor. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 3650 amends the Tax Code to provide that a tax is imposed and
becomes due and payable when a distributor in this state, rather than a
permit holder, receives or possesses tobacco products other than cigars for
the purpose of making a first sale in this state.  The bill also increases
the levied tax on tobacco products other than cigars from 35.213 percent of
the manufacturer's list price to 40 percent of the purchase price paid by
the distributor. 

EFFECTIVE DATE

The Act takes effect on the 91st day after adjournment.