CSSB 13(HES): "An Act relating to taxes on cigarettes and tobacco products, and to the filings of returns for and the use of the proceeds of those taxes; and providing for an effective date."
00CS FOR SENATE BILL NO. 13(HES) 01 "An Act relating to taxes on cigarettes and tobacco products, and to the filings 02 of returns for and the use of the proceeds of those taxes; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. LEGISLATIVE FINDINGS. The legislature finds that 06 (1) the first two and one-half mills of the tax on cigarettes supports the "school 07 fund," a pre-Statehood dedicated fund the proceeds of which are to be used only for the 08 construction and maintenance of public school facilities and for closely related purposes; 09 (2) as reported in the Alaska Constitutional Convention Proceedings, the 10 delegates to Alaska's Constitutional Convention, while favoring a general prohibition against 11 dedicated funds, authorized an exception in order to permit the continuance of a dedication 12 for special purposes in effect on the date of ratification of the proposed state constitution; 13 (3) in debate about the provision, key members of the convention committee 14 that developed its language, defending the exception, related that the provision was drafted
01 so that the rate of taxation that supported a dedicated fund could be changed by law without 02 affecting the status of the dedication; 03 (4) the attorney general, in a 1959 opinion, concluded that the legislature was 04 without power to raise or lower the dedication by increasing or decreasing the rate of a tax 05 or license fee; 06 (5) while the intent of the constitutional framers has weight in determining the 07 intent of the Constitutional Convention and has influenced the legislature in its decision to 08 increase the rate of the tax on cigarettes dedicated for deposit to the "school fund," a final 09 resolution of the question rests with the courts, which may find that any change made by the 10 legislature in the rate of taxation of cigarettes eliminates the dedicated status of the "school 11 fund" as an exception to the dedicated fund prohibition; and 12 (6) it is in the best interests of the state that the tax on cigarettes be increased, 13 but that provision for the increase in the rate of the state's tax on cigarettes shall be made in 14 the alternative so that, in the event a court makes a final determination that adjustment of the 15 rate of the tax that supports a dedicated fund eliminates the dedication, the tax will return to 16 its current rate, its dedication for school facility related purposes may continue, and the 17 increased levy shall instead be deposited into the general fund for the uses and purposes 18 otherwise described in this Act. 19 * Sec. 2. LEGISLATIVE INTENT. It is the intent of the legislature that, of the tax 20 revenue derived 21 (1) from the amendment to the cigarette tax made by sec. 5 of this Act, the 22 amount obtained be deposited into the school fund (AS 43.50.140) and used as required by 23 that section for state support of elementary and secondary education; 24 (2) from the amendment contingently made to the cigarette tax by sec. 7 of this 25 Act, subject to appropriation by the legislature, the amount obtained be deposited into the 26 school construction savings fund, an endowment trust fund, with the income to be used for 27 state support of elementary and secondary education; and 28 (3) from the amendment made to the tobacco tax by sec. 9 of this Act, subject 29 to appropriation, the amount obtained be used to establish and maintain an aggressive anti- 30 tobacco campaign targeting children, to be administered by the Department of Health and 31 Social Services, and be used to establish and maintain a program of pass-through grants to
01 municipalities to detect and prosecute those who sell or otherwise supply tobacco to children, 02 to be administered by the Department of Public Safety. 03 * Sec. 3. AS 37.13 is amended by adding a new section to article 2 to read: 04 Sec. 37.13.320. Corporation to manage school construction savings fund. 05 The corporation shall manage the school construction savings fund subject to 06 AS 37.13.120. 07 * Sec. 4. AS 37.14 is amended by adding a new section to read: 08 Article 2A. School Construction Savings Fund. 09 Sec. 37.14.175. School construction savings fund established. (a) The 10 school construction savings fund is established as a separate endowment trust of the 11 state. The principal of the school construction savings fund consists of legislative 12 appropriations to it, including those made under AS 43.50.190(c), and amounts 13 transferred from the fund's income to the fund's principal sufficient to offset the 14 effects of inflation on fund principal during the fiscal year. 15 (b) The school construction savings fund shall be held and invested by the 16 Alaska Permanent Fund Corporation subject to AS 37.13.120. 17 (c) The earnings from the school construction savings fund shall be accounted 18 for separately. Subject to appropriation, after transfer from income earnings to the 19 fund's principal of an amount sufficient to offset the effects of inflation on fund 20 principal during the fiscal year, the remaining income may be used for a purpose 21 described in AS 43.50.140. This section is not intended to create a dedication in 22 violation of art. IX, sec. 7, Constitution of the State of Alaska. 23 * Sec. 5. AS 43.50.090(a) is amended to read: 24 (a) There is levied an excise tax of 52 1/2 [TWO AND ONE-HALF] mills on 25 each cigarette imported or acquired in the state. Each licensee shall, at the time of 26 filing the return required by AS 43.50.080, pay to the department the excise for the 27 calendar month covered by the return, deducting three-tenths of one percent of the 28 total tax due, which the licensee shall retain to cover the expense of accounting and 29 filing returns. Cigarettes upon which the excise is imposed are not again subject to the 30 excise when acquired by another person. 31 * Sec. 6. AS 43.50.090(a) is amended to read:
01 (a) There is levied an excise tax of two and one-half [52 1/2] mills on each 02 cigarette imported or acquired in the state. Each licensee shall, at the time of filing 03 the return required by AS 43.50.080, pay to the department the excise for the calendar 04 month covered by the return, deducting three-tenths of one percent of the total tax due, 05 which the licensee shall retain to cover the expense of accounting and filing returns. 06 Cigarettes upon which the excise is imposed are not again subject to the excise when 07 acquired by another person. 08 * Sec. 7. AS 43.50.190 is amended to read: 09 Sec. 43.50.190. Additional tax levy on cigarettes. (a) There is levied an 10 excise tax of 62 [12] mills on each cigarette imported or acquired in this state. 11 (b) The tax levied by this section is in addition to the tax levied by 12 AS 43.50.010 - 43.50.180. The tax shall be administered and collected in the same 13 manner as the tax levied by AS 43.50.010 - 43.50.180, except that receipts from the 14 tax shall be deposited in the general fund and may be appropriated by the 15 legislature as provided by (c) of this section. The penalties provided in AS 43.05 16 apply to the tax levied in this section. 17 * Sec. 8. AS 43.50.190 is amended by adding a new subsection to read: 18 (c) The tax collected under (a) of this section that is deposited into the general 19 fund shall be accounted for separately in an account called the "school construction 20 savings transfer account." The legislature may appropriate from the "school 21 construction savings transfer account" to the school construction savings fund 22 established in AS 37.14.175. The deposit required and appropriation authorized by this 23 section are not intended to create a dedication in violation of art. IX, sec. 7, 24 Constitution of the State of Alaska. 25 * Sec. 9. AS 43.50.300 is amended to read: 26 Sec. 43.50.300. Excise tax levied. An excise tax is levied on tobacco products 27 in the state at the rate of 100 [25] percent of the wholesale price of the tobacco 28 products. The tax is levied when a person 29 (1) brings, or causes to be brought, a tobacco product into the state 30 from outside the state for sale; 31 (2) makes, manufactures, or fabricates a tobacco product in the state
01 for sale in the state; or 02 (3) ships or transports a tobacco product to a retailer in the state for 03 sale by the retailer. 04 * Sec. 10. AS 43.50.330(b) is amended to read: 05 (b) The licensee shall remit with the return the tax due under AS 43.50.300 06 for the month covered by the return, after deducting three-tenths of one percent of the 07 tax due, which the licensee shall retain to cover the expense of accounting and filing 08 the return. 09 * Sec. 11. AS 43.50 is amended by adding a new section to read: 10 Sec. 43.50.365. Tax adjustment. (a) The amounts in AS 43.50.090(a), in 11 AS 43.50.190(a), and in AS 43.50.300 change, as provided in this section, according 12 to and to the extent of changes in the Consumer Price Index for all urban consumers 13 for the Anchorage Metropolitan Area compiled by the Bureau of Labor Statistics, 14 United States Department of Labor. The index for January of 1998 is the reference 15 base index. 16 (b) The amounts change on July 1 of each even-numbered year in an amount 17 equal to the percentage of change, calculated to the nearest whole percentage point, 18 between the index for January of that year and the most recent index used to change 19 the amount in AS 43.50.300. However, the amounts do not change if the amounts 20 required by this section are those currently in effect as a result of earlier application 21 of this section. 22 (c) If the index is revised, the percentage of change is calculated on the basis 23 of the revised index. If a revision of the index changes the reference base index, a 24 revised reference base index is determined by multiplying the reference base index 25 applicable by the rebasing factor furnished by the United States Bureau of Labor 26 Statistics. If the index is superseded, the index referred to in this section is the one 27 represented by the Bureau of Labor Statistics as reflecting most accurately changes in 28 the purchasing power of the dollar for Alaska consumers. 29 * Sec. 12. AS 43.50 is amended by adding a new section to read: 30 Sec. 43.50.380. Notice. At the time of a change under AS 43.50.365 in the 31 amount of a tax, the department shall promptly give public notice of the change. The
01 department shall also provide notification of a change to all persons licensed under this 02 chapter. 03 * Sec. 13. CONDITIONAL EFFECT OF CERTAIN SECTIONS. Sections 3, 4, and 6 - 8 04 of this Act take effect only if 05 (1) a court enters a final judgment that the amendment made to 06 AS 43.50.090(a) by sec. 5 of this Act changing the rate of taxation on cigarettes violates the 07 prohibition set out in art. IX, sec. 7, Constitution of the State of Alaska, against dedication of 08 the proceeds of a state tax or license; and 09 (2) either the time for appeal of that judgment expires or, if an appeal is taken, 10 the court enters a final order in the appeal that AS 43.50.090(a), as amended by sec. 5 of this 11 Act, violates art. IX, sec. 7, Constitution of the State of Alaska. 12 * Sec. 14. CONDITIONAL RETROACTIVITY OF CERTAIN PROVISIONS. If secs. 6 13 and 7 of this Act take effect under sec. 13 of this Act, then the amendments to 14 AS 43.50.090(a) and 43.50.190(a) made by secs. 6 and 7 of this Act are retroactive to 15 October 1, 1997, and the revenue derived from the levy of mills per cigarette of the tax levied 16 under AS 43.50.090(a), as amended by sec. 5 of this Act, for cigarettes sold after 17 October 1, 1997, that exceeds two and one-half mills shall be credited to the tax levied under 18 AS 43.50.190(a), as amended by sec. 7 of this Act. 19 * Sec. 15. Sections 1, 2, 5, and 9 - 12 of this Act take effect October 1, 1997. 20 * Sec. 16. If secs. 3, 4, and 6 - 8 of this Act take effect under sec. 13 of this Act, they take 21 effect on the later of (1) the date a court enters a final judgment that the amendment made to 22 AS 43.50.090(a) by sec. 5 of this Act changing the rate of taxation on cigarettes violates the 23 prohibition set out in art. IX, sec. 7, Constitution of the State of Alaska, against dedication of 24 the proceeds of a state tax or license, and (2) the expiration of any time for appeal of that 25 judgment, or upon entry of a final order in the appeal that AS 43.50.090(a), as amended by 26 sec. 5 of this Act, violates art. IX, sec. 7, Constitution of the State of Alaska. The attorney 27 general shall promptly notify the lieutenant governor and the revisor of statutes of a judgment 28 described in this section.