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Developments in Federal Tobacco Tax Legislation - 2005
Celeste Drake
Office of U.S. Rep. Lloyd Doggett
• Coble Amendment
• SToP Act (H.R. 1377)
• Non-Mailable Tobacco Act (H.R. 1328)
• Non-Reintroduced Bills
• Other Congressional Priorities
Coble Amendment Attached to the Patriot Act Reauthorization
(H.R. 3199) during the House floor debate Nearly identical to Section 4 of the PACT Act,
which has not been reintroduced for the 109th Congress
Supported by the tobacco industry (Philip Morris)
Coble Amendment Amends the CCTA by: Amends the CCTA by:
lowering threshold to 10,000 from 60,000 lowering threshold to 10,000 from 60,000 cigarettescigarettes covering smokeless tobacco in excess of covering smokeless tobacco in excess of 500 single-unit cans or packages500 single-unit cans or packages
Coble Amendment Amends the CCTA by: Amends the CCTA by:
Requiring sellers, shippers, and distributors who reach the 10K threshold in a single month to submit detailed reports to the US AG, Treasury Secretary, and state and tribal AGs and tax administrators
Coble Amendment Defines a “delivery sale” as a sale in Defines a “delivery sale” as a sale in interstate commerce if consumer is not in the interstate commerce if consumer is not in the same physical location as seller when the order same physical location as seller when the order is placed (e.g., phone or internet order); and not is placed (e.g., phone or internet order); and not in the same place as the seller when delivery is in the same place as the seller when delivery is made (e.g., delivery through mail or common made (e.g., delivery through mail or common carrier).carrier).
Coble Amendment Directs that seized products be destroyed or used for undercover operations Authorizes state AGs and local governments to bring actions in federal court to prevent and restrain violations of the CCTA and obtain other appropriate relief Exempts tribal entities from
legal action
Coble Amendment Contains a non-preemption provision that Contains a non-preemption provision that makes clear that the law is not intended to makes clear that the law is not intended to modify or restrict the right of state or local modify or restrict the right of state or local governments to pursue other remediesgovernments to pursue other remedies Floor Statement was a good signFloor Statement was a good sign Amdmt removed from Senate versionAmdmt removed from Senate version Fate unclearFate unclear
Smuggled Tobacco Prevention Act (H.R. 1377 - Doggett)
• Basic purpose is to change labeling and reporting requirements to make smuggled cigarettes easier to identify
• Amends:– The Internal Revenue Code– The Jenkins Act– Contraband Cigarette Trafficking Act– Whistleblower provisions of Labor Code
Smuggled Tobacco Prevention Act (Labeling Requirements)
• All tobacco product packages must have a unique serial number
• Products manufactured for export must state nation of final destination
• Products to be sold on Indian Reservations must so state
Smuggled Tobacco Prevention Act (CCTA Amendments)
• Applies to quantities in excess of 2,000 cigarettes (Compare: 10,000 in Coble Amendment)
• Makes it unlawful to alter markings, interfere with inspections, transport under false or no bill of lading, or to fail to maintain reports
H.R. 2813, to make tobacco products non-mailable (Rep. McHugh)
• Introduced in June w/3 cosponsors
• Makes it unlawful to mail cigarettes, smokeless, pipe, and roll-your-own tobacco
• Allows USPS discretion regarding how to dispose of prohibited products
• Violations are civil, not criminal
Bills Not Yet Reintroduced
• PACT Act (Senators Kohl and Hatch)
• Internet Tobacco Sales Enforcement Act (Green and Meehan)
PACT Act• Stalled because of common carrier (e.g.,
UPS and FedEx) opposition to the requirement that they use compliant and non-compliant seller lists
• But these provisions form the heart of the legislation; without the lists, impact of bill would be mild to moderate, at best
PACT Act• Tobacco health groups are working with
Kohl and Hatch offices and other interested parties to reach a compromise
• If you are interested in seeing the PACT Act progress, please contact Senators Kohl, Hatch, or other members of the Senate Judiciary Committee to express your interest
Green-Meehan Act• Green was leading force behind this bill,
but may have lost interest due to difficulty of negotiating the “tribal sovereignty maze”
• Convenience stores, leading supporters of this bill, want to eliminate competition from tribal sales, but any changes that affect tribal sovereignty add opposition
• PACT, SToP Acts leave tribal sovereignty as is
Green-Meehan Act• Meehan and Platts, Chairs of the House
Task Force on Tobacco and Health, have new tobacco staffers since my last presentation; this seems to have affected the activity of the Task Force
What is Congress working on if not tobacco taxation issues?
Hurricane Katrina
Appropriations & Budget Reconciliation
Social Security Privatization
Energy Prices and Oil Drilling
Estate Tax Repeal and Other Tax Cuts
OutlookCoble Amendment has best chance of becoming law, and would provide an opening for the PACT Act if the parties can reach an agreement
Without the support of more committee chairpersons, the Doggett and McHugh bills have smaller chance of success this Congress
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