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Legislative Year: 2019 Change
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Bill Detail: HB19-1333

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Title Cigarette Tobacco & Nicotine Products Tax
Status Senate Second Reading Special Order - Lost with Amendments - Committee (05/02/2019)
Bill Subjects
  • Education & School Finance (Pre & K-12)
  • Fiscal Policy & Taxes
  • Health Care & Health Insurance
  • Liquor, Tobacco, & Marijuana
  • State Revenue & Budget
House Sponsors Y. Caraveo (D)
Senate Sponsors R. Fields (D)
House Committee Finance
Senate Committee Finance
Date Introduced 04/24/2019
Description

The bill refers a ballot issue to the voters at the November 2019
statewide election for the following tax increases:
  • To increase the cigarette tax by 8.75 cents per cigarette;
  • To increase the tobacco products tax by 22% of the
manufacturer's list price; and
  • To create a tax on nicotine products that is equal to 62% of
the manufacturer's list price, which is the same total tax as
the tax levied on tobacco products with the increase.
If voters approve the tax, then the state will have the authority to
impose these taxes and retain and spend the revenue as a voter-approved
revenue change, and the remainder of the bill takes effect upon approval.
The new nicotine products tax is modeled after the tobacco
products tax. Nicotine products are products that contain nicotine and that
are ingested into the body, which at this time is typically through vaping
with an electronic cigarette. The excise tax is levied on the sale, use,
consumption, handling, or distribution of all nicotine products in the state,
and it is imposed on a distributor at the time the product is brought into
the state, made here, or shipped or transported to retailers in the state. If
a distributor fails to pay the tax, then any person or entity in possession
of the nicotine products is liable for the tax.
To be a distributor of nicotine products, a person must have a
license. The license costs $10 per year and requires that the distributor
must have a tax license and comply with all of the laws relating to the
collection of the tax. Distributors are required to file quarterly returns,
and the department of revenue (department) may require electronic fund
transfers of the taxes paid. Licensees are required to maintain certain
records, and retailers are likewise required to maintain records about
nicotine products it purchases from a licensed distributor. The department
may share the names and addresses of persons who purchased nicotine
products for resale with the department of public health and environment
and county and district public health agencies.
To account for the increased taxes per cigarette, the discount
percentage on cigarette stamps that a cigarette wholesaler may retain for
its collection costs is reduced from 4% to .4% and the similar discount for
a tobacco products distributor is reduced from 3.33% to 1.6%. A nicotine
products distributor will be permitted to retain 1.1% of the taxes
collected.
In general, 50% of the revenue from the new nicotine products tax
and the additional cigarette and tobacco products taxes (new tax revenue)
is allocated for purposes related to health care, and 50% is allocated for
preschool programs and expanded learning opportunities. Specifically, the
new tax revenue is deposited in the old age pension fund and then
credited to the general fund in accordance with the state constitution. The
state treasurer is then required to transfer 50% of the new tax revenue
from the general fund to the behavioral health and health care
affordability and accessibility cash fund (behavioral health fund).
The state treasurer is further required to transfer money in the
behavioral health fund as follows:
  • 19%, up to $30 million, to the tobacco education programs
fund, which is primarily used for tobacco education,
prevention, and cessation programs, which are expanded to
include nicotine products; and
  • 9.5%, up to $15 million, to offset the decreased revenue
from the existing taxes that may result from the
voter-approved rate increases, and of this amount, 73% is
further allocated to the tobacco tax cash fund and 27% to
the general fund.
For fiscal years that begin prior to July 1, 2023, the general
assembly is required to appropriate the remainder of the money in the
behavioral health fund as follows:
  • 66% to make health care more affordable and accessible;
and
  • 34% to improve the provision of behavioral health services
for children and youth.
Thereafter, the specific allocation no longer applies and the only
limitation on appropriating for these 2 purposes is that each purpose must
receive at least 20% of the fund remainder.
The state treasurer is required to transfer the other 50% of the new
tax revenue to the newly created preschool programs cash fund, from
which money is appropriated to the department of education to improve
the availability, affordability, and quality of voluntary early childhood
education, and to the Colorado expanded learning opportunities cash
fund, from which money is used for the Colorado expanded learning
opportunities program. The allocation of the new tax revenue between the
2 funds is as follows:
  • For the 2019-20 and 2020-21 fiscal years, 35% to the
preschool programs cash fund and 15% to the Colorado
expanded learning opportunities cash fund;
  • For the 2021-22 fiscal year, 30% to the preschool programs
cash fund and 20% to the Colorado expanded learning
opportunities cash fund; and
  • For the 2022-23 fiscal year and each fiscal year thereafter,
27.5% to the preschool programs cash fund and 22.5% to
the Colorado expanded learning opportunities cash fund.
The state auditor is required to annually conduct a financial audit of the
use of the new tax revenue.
The bill also creates the Colorado expanded learning opportunities
program, which is established to allow eligible students to participate in
out-of-school learning experiences. The Colorado expanded learning
opportunities agency, which is an independent agency in the department
of education, through an administering nonprofit, pays providers for
eligible students to participate in such experiences.

Committee Reports
with Amendments
Full Text
Full Text of Bill (pdf) (most recent)
Fiscal Notes Fiscal Notes (05/15/2019) (most recent)  
Additional Bill Documents Bill Documents
Including:
  • Past bill versions
  • Past fiscal notes
  • Committee activity and documents
  • Bill History
 
Lobbyists Lobbyists
Audio [This feature is available by subscription.]  
Votes House and Senate Votes
Vote Totals Vote Totals by Party
 
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