Senator Perez introduced Bill No. 427-35, which seeks to amend the Cigarette Tax Stamp Act in preparation of its implementation and upon recent clarification from the Attorney General’s office that the cigarette stamp tax is the same as tobacco taxes.
Perez says Bill 427 aims to facilitate collections that goes toward the Healthy Futures Fund upon the future implementation of the cigarette stamp tax. Currently, the Department of Revenue and Taxation, in close collaboration with the AG’s office, is developing the rules and regulations, which are a prerequisite to the cigarette stamp tax implementation.
In her news release, Senator Perez said that at present, wholesalers are afforded the opportunity to place their products that arrive at the port into a bonded warehouse, which delays the taxation of the products. Upon withdrawal of the products from the bonded warehouse, the payment of taxes is again delayed to the 20th day of the following month of the month the products were sold.
With the Cigarette Tax Stamp Act, passed as Public Law 34-55, wholesalers are afforded another delay as payment for the stamps purchased can be paid in the following month.
“The double delay in taxes is an issue because these funds go towards DPHSS, GMH, GBHWC, and those responding to our current public health emergency,” said Senator Perez.
“In anticipation of the implementation of the cigarette stamp tax, it is important to streamline the collections process to ensure that Healthy Future Fund are not impacted.”
Bill 427-35 also seeks to eliminate the discount on the stamps afforded to wholesalers who purchase the stamps. A 0.4% discount was provided in the Cigarette Tax Stamp Act to offset costs to wholesalers for affixing the stamps onto the cigarettes.
“The discount is not just a discount on the stamps but it’s a discount on cigarette taxes. This discount means less funds will be going to the Healthy Futures Fund, which would exacerbate a budget shortfall to public health during a critical time,” said Perez.
In a 2019 audit of the bonded warehouse system conducted by the Office of Accountability, taxing of cigarettes relies on voluntary compliance, which unfairly benefits those tobacco wholesalers who do not comply with the law. “Affixing stamps on cigarette packages and collecting taxes upon purchase of stamps will increase accountability by aiding enforcement efforts and promoting timely reconciliation of taxes filed,” said Senator Perez.
Bill 427-35 refines the Cigarette Tax Stamp Act by ensuring all of taxes due are paid at the time of purchase of the stamps. “This legislation is a step in the right direction by enhancing accountability and strengthening the payment system of taxes that support critical public health needs of our community and response to the pandemic,” said Senator Perez.
(News release from Senator Sabina Perez)