Smoking Cost Recovery and Education Tax Act of 1989

Smoking Cost Recovery and Education Tax Act of 1989 - Amends the Internal Revenue Code to increase all existing Federal excise taxes on tobacco products.

Imposes a new tax of $1.17 per pound on cigarette tobacco manufactured in or imported into the United States.

Establishes in the Treasury the Smoking Cost Recovery and Education Trust Fund, to be available to finance educational programs (including paid advertising) concerning the hazards of cigarette smoking, with emphasis on discouraging smoking by youth. Appropriates to the Fund ten percent of the increase in tobacco tax revenue generated as a result of this Act.

Directs the Secretary of the Treasury to conduct an ongoing study and to report biennially to specified congressional committees on: (1) the effects of smoking on health care costs; and (2) the incidence of cigarette smoking by youth, including the relationship between cigarette tax rates and youth smoking.

 
HR 718 IH
101st CONGRESS
1st Session
 H. R. 718
To amend the Internal Revenue Code of 1986 to increase Federal excise taxes
on tobacco products and to provide that a portion of the revenues from such
increase be used for programs to discourage cigarette smoking and tobacco
use particularly by youth.
IN THE HOUSE OF REPRESENTATIVES
January 31, 1989
Mr. ANDREWS (for himself, Mr. STARK, Mr. CHANDLER, Mr. WAXMAN, Mr. SYNAR,
Mr. HANSEN, Mrs. COLLINS, Mr. BATES, Mr. MRAZEK, Ms. SCHNEIDER, Mr. ACKERMAN,
Mr. LIPINSKI, Mrs. ROUKEMA, Mr. ATKINS, Mrs. BOXER, and Mr. OBERSTAR)
introduced the following bill; which was referred jointly to the Committees
on Ways and Means and Energy and Commerce
A BILL
To amend the Internal Revenue Code of 1986 to increase Federal excise taxes
on tobacco products and to provide that a portion of the revenues from such
increase be used for programs to discourage cigarette smoking and tobacco
use particularly by youth.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Smoking Cost Recovery and Education Tax Act
  of 1989'.
SEC. 2. INCREASE IN EXCISE TAXES.
  (a) CIGARS- Subsection (a) of section 5701 of the Internal Revenue Code
  of 1986 (relating to rate of tax on cigars) is amended--
  (1) by striking `75 cents' in paragraph (1) and inserting `$1.95', and
  (2) in paragraph (2)--
  (A) by striking `8 1/2  percent' and inserting `22.1 percent', and
  (B) by striking `$20' and inserting `$52'.
  (b) CIGARETTES- Subsection (b) of section 5701 of such Code (relating to
  rate of tax on cigarettes) is amended--
  (1) by striking `$8' in paragraph (1) and inserting `$20.50', and
  (2) by striking `$16.80' in paragraph (2) and inserting `$43.05'.
  (c) CIGARETTE PAPERS- Subsection (c) of section 5701 of such Code (relating
  to cigarette papers) is amended by striking ` 1/2  cent' and inserting
  `1.3 cents'.
  (d) CIGARETTE TUBES- Subsection (d) of section 5701 of such Code (relating to
  cigarette tubes) is amended by striking `1 cent' and inserting `2.6 cents'.
  (e) SMOKELESS TOBACCO- Subsection (e) of section 5701 of such Code (relating
  to smokeless tobacco) is amended--
  (1) by striking `24 cents' and inserting `62 cents', and
  (2) by striking `8 cents' and inserting `20.8 cents', and.
  (f) PIPE TOBACCO- Subsection (f) of section 5701 of such Code (relating
  to pipe tobacco) is amended by striking `45 cents' and inserting `$1.17'.
  (g) IMPOSITION OF TAX ON CIGARETTE TOBACCO-
  (1) IN GENERAL- Section 5701 of such Code is amended by redesignating
  subsection (g) as subsection (h) and by inserting after subsection (f)
  the following new subsection:
  `(g) CIGARETTE TOBACCO- On cigarette tobacco, manufactured in or imported
  into the United States, there shall be imposed a tax of $1.17 per pound (and
  a proportionate tax at the like rate on all fractional parts of a pound).'
  (2) CIGARETTE TOBACCO DEFINED- Section 5702 of such Code is amended by
  adding at the end thereof the following new subsection:
  `(p) CIGARETTE TOBACCO- The term `cigarette tobacco' means any tobacco which,
  because of its appearance, type, packaging, or labeling, is suitable for
  use and likely to offered to, or purchased by, consumers as tobacco to be
  rolled into a cigarette.'
  (3) CONFORMING AMENDMENTS-
  (A) Subsection (c) of section 5702 of such Code is amended by striking
  `and pipe tobacco' and inserting `pipe tobacco, and cigarette tobacco'.
  (B) Subsection (d) of section 5702 of such Code is amended by striking
  `or pipe tobacco' and inserting `pipe tobacco, or cigarette tobacco'.
  (h) FLOOR STOCK TAXES-
  (1) IMPOSITION OF TAX- On tax-increased articles manufactured in or imported
  into the United States which are removed before October 1, 1989, and held on
  such date for sale by any person, there shall be imposed the following taxes:
  (A) SMALL CIGARS- On cigars, weighing not more than 3 pounds per thousand,
  $1.20 per thousand.
  (B) LARGE CIGARS- On cigars weighing more than 3 pounds per thousand,
  13.6 percent of the wholesale price, but not more than $32 per thousand.
  (C) SMALL CIGARETTES- On cigarettes, weighing not more than 3 pounds per
  thousand, $12.50 per thousand.
  (D) LARGE CIGARETTES- On cigarettes weighing more than 3 pounds per thousand,
  $26.25 per thousand; except that, if more than 6 1/2  inches in length,
  they shall be taxable at the rate prescribed for cigarettes weighing not
  more than 3 pounds per thousand, counting each 2 3/4  inches, or fraction
  thereof, of the length of each as one cigarette.
  `(E) CIGARETTE PAPERS- On each book or set of cigarette papers containing
  more than 25 papers, 0.8 cents for each 50 papers or fractional part thereof;
  except that, if cigarette papers measure more than 6 1/2  inches in length,
  they shall be taxable at the rate prescribed, counting each 2 3/4  inches,
  or fraction thereof, of the length of each as one cigarette paper.
  `(F) CIGARETTE TUBES- On cigarette tubes, 1.6 cent for each 50 tubes or
  fractional part thereof; except that, if cigarette tubes measure more than
  6 1/2  inches in length, they shall be taxable at the rate prescribed,
  counting each 2 3/4  inches, or fraction thereof, of the length of each
  as one cigarette tube.
  `(G) SNUFF- On snuff, 38 cents.
  `(H) CHEWING TOBACCO- On chewing tobacco, 12.8 cents.
  `(I) PIPE TOBACCO- On pipe tobacco, 72 cents.
  `(J) CIGARETTE TOBACCO- On cigarette tobacco, $1.17 cents.
  (2) LIABILITY FOR TAX AND METHOD OF PAYMENT-
  (A) LIABILITY FOR TAX- A person holding tax-increased articles on October
  1, 1989, to which any tax imposed by paragraph (1) applies shall be liable
  for such tax.
  (B) METHOD OF PAYMENT- The tax imposed by paragraph (1) shall be treated
  as a tax imposed by section 5701 of the Internal Revenue Code of 1986
  and shall be due and payable on October 14, 1989, in the same manner as
  the tax imposed by such section is payable with respect to like articles
  removed on or after October 1, 1989.
  (C) TREATMENT OF CIGARETTES IN FOREIGN TRADE ZONES- Notwithstanding the
  Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a), or any other provision
  of law, tax-increased articles which are located in a foreign trade zone
  on October 1, 1988, shall be subject to the tax imposed by paragraph (1)
  and shall be treated for purposes of this subsection as held on such date
  for sale if--
  (i) internal revenue taxes have been determined, or customs duties
  liquidated, with respect to such articles before such date pursuant to a
  request made under the first proviso of section 3(a) of such Act, or
  (ii) such articles are held on such date under the supervision of a customs
  officer pursuant to the second proviso of such section 3(a).
Under regulations prescribed by the Secretary of the Treasury or his delegate,
provisions similar to sections 5706 and 5708 of such Code shall apply to
articles with respect to which tax is imposed by paragraph (1) by reason of
this subparagraph.
  (3) TAX-INCREASED ARTICLES- For purposes of this subsection, the term
  `tax-increased articles' means tobacco products (as defined by section
  5702(c) of the Internal Revenue Code of 1986, as amended by this Act),
  cigarette papers (as defined by section 5702(f) of such Code), and cigarette
  tubes (as defined by section 5702(g) of such Code).
  (4) EXCEPTION FOR RETAILERS- The taxes imposed by paragraph (1) shall not
  apply to tax-increased articles in retail stocks held on October 1, 1989,
  at the place where intended to be sold at retail.
  (c) EFFECTIVE DATE- The amendment made by subsection (a) shall apply with
  respect to articles removed after September 30, 1989.
SEC. 3. ESTABLISHMENT OF SMOKING COST RECOVERY AND EDUCATION TRUST FUND.
  (a) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of
  1986 (relating to trust fund code) is amended by adding at the end thereof
  the following new section:
`SEC. 9511. SMOKING COST RECOVERY AND EDUCATION TRUST FUND.
  `(a) CREATION OF TRUST FUND- There is established in the Treasury of the
  United States a trust fund to be known as the `Smoking Cost Recovery and
  Education Trust Fund', consisting of such amounts as may be appropriated or
  credited to such Trust Fund as provided in this section or section 9602(b).
  `(b) TRANSFERS TO TRUST FUND- There is hereby appropriated to the Smoking
  Cost Recovery and Education Trust Fund amounts equivalent to 10 percent of
  the increase in revenues received in the Treasury from the taxes imposed
  by section 5701 attributable to the amendments made by the Smoking Cost
  Recovery and Education Tax Act of 1989.
  `(c) EXPENDITURES FROM TRUST FUND- Amounts in the Smoking Cost Recovery
  and Education Trust Fund shall be available, as provided in appropriation
  Acts, for purposes of educating the United States public on the hazards of
  cigarette smoking and tobacco use (including through school age, minority
  health, and other educational programs and through paid advertising efforts),
  with special emphasis on discouraging cigarette smoking by youth.'
  (b) CLERICAL AMENDMENT- The table of sections for such subchapter A is
  amended by adding at the end thereof the following new item:
`Sec. 9511. Smoking Cost Recovery and Education Trust Fund.'
SEC. 4. STUDY ON HEALTH CARE COSTS RESULTING FROM SMOKING.
  (a) IN GENERAL- The Secretary of the Treasury shall, in consultation with the
  Surgeon General of the Public Health Service, conduct an ongoing study of--
  (1) the public and private health care costs incurred as a result of
  cigarette smoking in the United States,
  (2) the incidence of cigarette smoking in the United States by teenage
  and younger children, and
  (3) the impact of the rate of the excise tax imposed by section 5701 of
  the Internal Revenue Code of 1986 on cigarette smoking by such children.
  (b) REPORT- Reports of the study required by subsection (a) shall be
  submitted every 2 years, with the 1st such report to be submitted by
  January 1, 1990. Each such report shall be submitted to the Committee
  on Ways and Means of the House of Representatives and the Committee on
  Finance of the Senate.