1.1 	A bill for an act
1.2 	relating to taxes; equalizing the health impact fee and excise tax on other tobacco 
1.3 	products; clarifying the application of the tobacco use health impact fee on 
1.4 	other tobacco products;amending Minnesota Statutes 2004, section 297F.05, 
1.5 	subdivisions 3, 4; Minnesota Statutes 2005 Supplement, section 256.9658, 
1.6 	subdivision 3.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2005 Supplement, section 256.9658, subdivision 3, 
1.9 	is amended to read:
1.10 		Subd. 3.Fee imposed. (a) A fee is imposed upon the sale of cigarettes in this 
1.11 	state, upon having cigarettes in possession in this state with intent to sell, upon any 
1.12 	person engaged in business as a distributor, and upon the use or storage by consumers 
1.13 	of cigarettes. The fee is imposed at the following rates:
1.14 	(1) on cigarettes weighing not more than three pounds per thousand, 37.5 mills on 
1.15 	each cigarette; and
1.16 	(2) on cigarettes weighing more than three pounds per thousand, 75 mills on each 
1.17 	cigarette.
1.18 	(b) A fee is imposed upon all tobacco products in this state and upon any person 
1.19 	engaged in business as a distributor in an amount equal to the liability for tax under 
1.20 	section 297F.05, subdivision 3, or on a consumer of tobacco products equal to the tax 
1.21 	under section 297F.05, subdivision 4. Liability for the fee is in addition to the tax under 
1.22 	section 297F.05, subdivision 3 or 4. If, for any reason, a fee under paragraph (a) is not 
1.23 	being collected on all cigarettes or the fee on all cigarettes is refunded, the fee must not be 
1.24 	collected or must be refunded on any other tobacco products under this paragraph.

2.1 	EFFECTIVE DATE. This section is effective the day following final enactment 
2.2 	and in addition applies to any tobacco products fees held in escrow by the Department 
2.3 	of Revenue pending a court determination on the constitutionality of the health impact 
2.4 	fee and to any refunds issued after the day following final enactment without regard to 
2.5 	the date of collection of the fee. 

2.6 	Sec. 2. Minnesota Statutes 2004, section 297F.05, subdivision 3, is amended to read:
2.7 		Subd. 3.Rates; tobacco products. A tax is imposed upon all tobacco products 
2.8 	in this state and upon any person engaged in business as a distributor, at the rate of 35
2.9 	17.37 percent of the wholesale sales price of the tobacco products. The tax is imposed at 
2.10 	the time the distributor:
2.11 	(1) brings, or causes to be brought, into this state from outside the state tobacco 
2.12 	products for sale;
2.13 	(2) makes, manufactures, or fabricates tobacco products in this state for sale in 
2.14 	this state; or
2.15 	(3) ships or transports tobacco products to retailers in this state, to be sold by those 
2.16 	retailers.
2.17 	The tax that is imposed upon cigars by this subdivision shall not exceed an amount 
2.18 	equal to 50 cents per cigar for any wholesale transaction.

2.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

2.20 	Sec. 3. Minnesota Statutes 2004, section 297F.05, subdivision 4, is amended to read:
2.21 		Subd. 4.Use tax; tobacco products. A tax is imposed upon the use or storage by 
2.22 	consumers of tobacco products in this state, and upon such consumers, at the rate of 35
2.23 	17.37 percent of the cost to the consumer of the tobacco products not to exceed an amount 
2.24 	equal to 50 cents per cigar.

2.25 	EFFECTIVE DATE. This section is effective the day following final enactment.