COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 2646-01
Bill No.: #SB 839
Subject: Taxation and Revenue - Sales and Use; Tobacco Products
Type: Corrected
Date: January 26, 2004
# Correct Bill Number
FISCAL SUMMARY
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| General Revenue | $119,112,875 | $237,600,000 | $236,900,000 |
| Total Estimated
Net Effect on General Revenue Fund* |
$119,112,875 | $237,600,000 | $236,900,000 |
* This proposal is permissive. Voter approval would be required before fiscal impact would be realized.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All State Funds |
$0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 5 pages.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Local Government | $0 | $0 | $0 |
ASSUMPTION
Department of Revenue (DOR) officials state this legislation proposes to the voters, an increase of cigarette tax from 17 cent/pack to 57 cents/pack of 20 cigarettes and an increase in other tobacco products tax from 10% of the manufacturer's invoice to 33.5% of the manufacturer's invoice. This will have a minimal impact on the Division of Taxation.
The Division of Taxation will need to revise forms and programs (requiring less than an hour of programming), and mail 230 notification letters to licensees at a cost of $62. DOR will administer and collect the additional tax with existing staff.
Officials from the Office of Administration, Budget and Planning (BAP) assume this proposal, subject to voter approval, would increase the state cigarette tax from 17 to 57 cents per pack of 20 cigarettes and increase the Other Tobacco Products (OTP) tax from 10% to 33.5% of the wholesale price.
ASSUMPTION (continued)
| Revenue Impact
(millions of dollars) | ||
| Fiscal Year | Cigarette Tax | OTP Tax |
| 2005 | $105.7 | $13.5 |
| 2006 | $209.3 | $28.3 |
| 2007 | $207.2 | $29.7 |
Assumptions:
Officials from the Secretary of State (SOS) assume statewide newspaper publication of constitutional amendments cost approximately $1,161 per column inch based on estimate provided by the Missouri Press Service x 3 for multiple printings as required by the Constitution and state statute = $3,485 per column inch. SOS estimates the total number of inches for this amendment to be 25 inches, which includes title header and certification paragraph. $3,485 x 25 inches = $87,125.
Since this legislation is subject to voter referendum, Oversight assumes this proposal would have no state fiscal impact without voter approval. Oversight assumes the proposal would be on the ballot for the first Tuesday in November 2004.
| FISCAL IMPACT - State Government | FY 2005
(6 Mo.) |
FY 2006 | FY 2007 |
| GENERAL REVENUE FUND | |||
| Income - General Revenue | |||
| Increase in cigarette tax | $105,700,000 | $209,300,000 | $207,200,000 |
| Increase in OTP tax | $13,500,000 | $28,300,000 | $29,700,000 |
| Total Income - GR | $119,200,000 | $237,600,000 | $236,900,000 |
| Cost - Secretary of State | |||
| Publication costs | ($87,125) | $0 | $0 |
| TOTAL ESTIMATED NET EFFECT ON GENERAL REVENUE FUND* |
$119,112,875 |
$237,600,000 |
$236,900,000 |
| * This proposal is permissive. Voter approval would be required before fiscal impact would be realized. | |||
| FISCAL IMPACT - Local Government | FY 2005
(6 Mo.) |
FY 2006 | FY 2007 |
| $0 | $0 | $0 |
FISCAL IMPACT - Small Business
Small businesses that sell cigarettes and other tobacco products would be expected to pay/collect the increased tax as a result of this proposal.
DESCRIPTION
This proposal increases the cigarette tax to twenty-eight and one-half mills per cigarette, or fifty-seven cents per pack. This act also increases the tax on tobacco products other than cigarettes to thirty-three and one-half percent. This is a forty cent per-pack increase to cigarettes and a twenty-three and one-half percentage point increase to tobacco products.
DESCRIPTION (continued)
The increased revenue from these two tax changes shall be deposited in the General Revenue Fund.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Revenue
Office of Administration
Budget and Planning
Secretary of State
Mickey Wilson, CPA
Director
January 26, 2004