04/24/2003 01:31 PM Senate L&C

               SB 168-CIGARETTE SALE/DISTRIBUTION                                                                           
                                                                                                                                
CHAIR BUNDE announced SB 168 to  be up for consideration and that                                                               
the  industry requested  the  committee  include minimum  pricing                                                               
verbiage,  which has  been included  in the  committee substitute                                                               
(CS).                                                                                                                           
                                                                                                                                
SENATOR SEEKINS  moved to adopt the  CS to SB 168,  Version I, as                                                               
the  working document.  There were  no objections  and it  was so                                                               
ordered.                                                                                                                        
                                                                                                                                
MS. JANE ALBERTS,  staff to Senator Bunde, said that  the CS sets                                                               
a minimum price  for the sale of cigarettes,  either wholesale or                                                               
retail,  in the  state creating  a more  level playing  field for                                                               
competition. She  explained that the Department  of Revenue (DOR)                                                               
would   receive  a   wholesale  list   price  from   the  tobacco                                                               
manufacturer of  all the  various brands  of cigarettes  from the                                                               
high end all  the way to the  low end. That price  will be listed                                                               
on its website  for all distributors to see.  Everyone would know                                                               
the  price and  be better  able to  police each  other to  see if                                                               
anyone is underselling. Upon discovering  an entity selling below                                                               
cost, a  competitor could contact  the Department of  Revenue and                                                               
file court action,  a class B misdemeanor with a  fine of $2,000,                                                               
against  the violator.  The  bill  was set  up  this  way so  the                                                               
industry could self  regulate and only involve  the Department of                                                               
Revenue in extreme cases to keep the cost to the state lower.                                                                   
                                                                                                                                
CHAIR  BUNDE explained  the changes  in the  CS are  basically on                                                               
page 9, lines 26 - 27, where  it states there was a zero discount                                                               
for collecting tax on more than $2 million worth of cigarettes.                                                                 
                                                                                                                                
MR.  MIKE  ELERDING,  Northern  Sales,  supported  the  committee                                                               
substitute. He thanked the committee  for working on the bill. He                                                               
said  the  department  has  projected   that  every  one  percent                                                               
increase in taxes would generate  an increase in revenue of about                                                               
$400,000. Other  states that have  implemented a tax  stamp after                                                               
not  having   one  have  had   significant  increases   in  their                                                               
collections. He said  that he has some definitions  to offer, but                                                               
didn't want to slow the bill down.                                                                                              
                                                                                                                                
CHAIR BUNDE  responded that the  wordsmithing could  be discussed                                                               
in the Senate Finance Committee.                                                                                                
                                                                                                                                
SENATOR  SEEKINS moved  on  page  9, lines  26  -  27, to  delete                                                               
language  after "$2  million" through  "$5 million"  so it  would                                                               
read "the amount  that is more than $2 million  is zero percent."                                                               
There were no objections and it was adopted.                                                                                    
                                                                                                                                
SENATOR  SEEKINS moved  to pass  CSSB 168(L&C),  Version I,  from                                                               
committee  with individual  recommendations  and the  appropriate                                                               
fiscal note.                                                                                                                    
                                                                                                                                
The  roll was  called. SENATORS  FRENCH, STEVENS,  DAVIS, SEEKINS                                                               
and BUNDE voted yea and CSSB 168(L&C) moved from committee.