02/10/2004 01:31 PM Senate L&C

                  SB 291-UNSTAMPED CIGARETTES                                                                               
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:31  p.m. Present  were Senators                                                               
Stevens, French and  Chair Bunde. The first order  of business to                                                               
come before the committee was SB 291.                                                                                           
                                                                                                                                
MS.  JOHANNA   BALES,  Auditor,  Department  of   Revenue  (DOR),                                                               
explained that last  session a bill passed requiring  a tax stamp                                                               
(showing  tax  had been  paid)  on  all  packs of  cigarettes.  A                                                               
transition  period  of  90  days was  allowed  during  which  any                                                               
product brought into  the state prior to January 1  could be sold                                                               
until  March 31  without having  that stamp.  However, after  the                                                               
bill was signed  into law, the major  manufacturers changed their                                                               
returned goods  policy. Formerly, full  credit was given  for all                                                               
returned cigarettes no  matter what the reason, but  now none are                                                               
being taken back. Originally, the  department had assumed that 90                                                               
days   was   a  sufficient   transition   time,   but  with   the                                                               
manufacturers' new return policy,  distributors need more. SB 291                                                               
extends the transition period from March 31 to June 30, 2004.                                                                   
                                                                                                                                
The  Department of  Revenue  supports this  bill,  but would  not                                                               
extend the  period for  affixing stamps  on cigarettes  that were                                                               
not in the state prior to January 1, 2004.                                                                                      
                                                                                                                                
SENATOR  GARY STEVENS  asked if  she was  sure the  additional 90                                                               
days would be enough to sell all the cigarettes.                                                                                
                                                                                                                                
MS.  BALES replied  that  90  days should  be  sufficient as  the                                                               
normal shelf  time for cigarettes is  four to six months.  DOR is                                                               
also  working   with  the  manufacturers   to  get  all   of  the                                                               
distributors' products stamped as quickly as possible.                                                                          
                                                                                                                                
SENATOR FRENCH asked what prevents  a merchandiser from getting a                                                               
stamp on the cigarettes he has in stock now.                                                                                    
                                                                                                                                
MS. BALES said  the problem is one of  duplicate taxation because                                                               
the  statute says  the department  must  sell the  stamp and  the                                                               
excise  tax [on  in-stock  cigarettes] was  already paid  through                                                               
return filings.  They researched  other ways of  providing stamps                                                               
with the  Department of  Law, but found  that stamps  couldn't be                                                               
given away.                                                                                                                     
                                                                                                                                
MR. MIKE  ELERDING, owner, Northern Sales  Distribution Co., said                                                               
he had submitted written testimony in support of SB 291.                                                                        
                                                                                                                                
SENATOR  STEVENS  moved  to  pass  SB  291  from  committee  with                                                               
individual  recommendations and  attached  fiscal note.  Senators                                                               
Stevens,  French and  Bunde  voted  yes and  SB  291 passed  from                                                               
committee.