HTRC/HB 984

Page 1

AN ACT

RELATING TO TOBACCO; CHANGING AND ADDING DEFINITIONS IN THE

CIGARETTE TAX ACT; EXPANDING CIGARETTE PACKAGING AMOUNTS;

PROVIDING FOR EXCISE TAX RATES BASED ON PACKAGING; AMENDING

THE CIGARETTE TAX ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-12-2 NMSA 1978 (being Laws 1971,

Chapter 77, Section 2, as amended) is amended to read:

"7-12-2. DEFINITIONS.--As used in the Cigarette Tax

Act:

A. "cigarette" means:

(1) any roll of tobacco or any substitute

for tobacco wrapped in paper or in any substance not

containing tobacco; or

(2) any roll of tobacco that is wrapped in

any substance containing tobacco, other than one hundred

percent natural leaf tobacco, which because of its appearance,

the type of tobacco used in the filler, its packaging and

labeling, or its marketing and advertising, is likely to be

offered to, or purchased by, consumers as a cigarette, as

described in Paragraph (1) of this subsection, and "cigarette"

includes bidis and kreteks;

B. "contraband cigarettes" means cigarette

packages with counterfeit stamps, counterfeit cigarettes,

HTRC/HB 984

Page 2

cigarettes that have false or fraudulent manufacturing labels,

cigarettes not sold in packages of five, ten, twenty or

twenty-five and cigarette packages without the tax or tax-

exempt stamps required by the Cigarette Tax Act;

C. "department" means the taxation and revenue

department, the secretary of taxation and revenue or any

employee of the department exercising authority lawfully

delegated to that employee;

D. "distributor" means a person licensed pursuant

to the Cigarette Tax Act to sell or distribute cigarettes in

New Mexico. "Distributor" does not include:

(1) a retailer;

(2) a cigarette manufacturer, export

warehouse proprietor or importer with a valid permit pursuant

to 26 U.S.C. 5713, if that person sells cigarettes in New

Mexico only to distributors that hold valid licenses under the

laws of a state or sells to an export warehouse proprietor or

to another manufacturer; or

(3) a common or contract carrier

transporting cigarettes pursuant to a bill of lading or

freight bill, or a person who ships cigarettes through the

state by a common or contract carrier pursuant to a bill of

lading or freight bill;

E. "license" means a license granted pursuant to

the Cigarette Tax Act that authorizes the holder to conduct

HTRC/HB 984

Page 3

business as a manufacturer or distributor of cigarettes;

F. "manufacturer" means a person that

manufactures, fabricates, assembles, processes or labels a

cigarette or that imports from outside the United States,

directly or indirectly, a finished cigarette for sale or

distribution in the United States;

G. "master settlement agreement" means the

settlement agreement and related documents entered into on

November 23, 1998 by the state and leading United States

tobacco product manufacturers;

H. "package" means an individual pack, box or

other container; "package" does not include a container that

itself contains other containers, such as a carton of

cigarettes;

I. "retailer" means a person, whether located

within or outside of New Mexico, that sells cigarettes at

retail to a consumer in New Mexico and the sale is not for

resale;

J. "stamp" means an adhesive label issued and

authorized by the department to be affixed to cigarette

packages for excise tax purposes and upon which is printed a

serial number and the words "State of New Mexico" and "tobacco

tax";

K. "tax stamp" means a stamp that has a specific

cigarette tax value pursuant to the Cigarette Tax Act; and

HTRC/HB 984

Page 4

L. "tax-exempt stamp" means a stamp that indicates

a tax-exempt status pursuant to the Cigarette Tax Act."

Section 2. Section 7-12-3 NMSA 1978 (being Laws 1971,

Chapter 77, Section 3, as amended) is amended to read:

"7-12-3. EXCISE TAX ON CIGARETTES--RATES.--

A. For the privilege of selling, giving or

consuming cigarettes in New Mexico, there is levied an excise

tax at the following rates for each cigarette sold, given or

consumed in this state:

(1) four and fifty-five hundredths cents

($.0455) if the cigarettes are packaged in lots of twenty or

twenty-five;

(2) nine and ten-hundredths cents ($.091) if

the cigarettes are packaged in lots of ten; or

(3) eighteen and twenty-hundredths cents

($.182) if the cigarettes are packaged in lots of five.

B. The tax imposed by this section shall be

referred to as the "cigarette tax"."

Section 3. Section 7-12-5 NMSA 1978 (being Laws 1971,

Chapter 77, Section 5, as amended) is amended to read:

"7-12-5. AFFIXING STAMPS.--

A. Except as provided in Section 7-12-6 NMSA 1978,

all cigarettes shall be placed in packages or containers to

which a stamp shall be affixed. Only a distributor with a

valid license issued pursuant to the Cigarette Tax Act may

HTRC/HB 984

Page 5

purchase or obtain unaffixed tax-exempt stamps or tax stamps.

A distributor shall not sell or provide unaffixed stamps to

another distributor, manufacturer, export warehouse proprietor

or importer with a valid permit pursuant to 26 U.S.C. 5713 or

any other person.

B. Stamps shall be affixed by the distributor to

each package of cigarettes to be sold or distributed in New

Mexico within ten days of receipt of those packages.

C. A distributor shall apply stamps only to

packages of cigarettes that it has received directly from a

manufacturer or importer of cigarettes that possesses a valid

and current permit pursuant to 26 U.S.C. 5713.

D. Packages shall contain cigarettes in lots of

five, ten, twenty or twenty-five.

E. Unless the requirements of this section are

waived pursuant to Section 7-12-6 NMSA 1978, a tax stamp shall

be affixed to each package of cigarettes subject to the

cigarette tax and a tax-exempt stamp shall be affixed to each

package of cigarettes not subject to the cigarette tax

pursuant to Section 7-12-4 NMSA 1978.

F. A tax-exempt stamp is not an excise tax stamp

for purposes of determining units sold pursuant to Section

6-4-12 NMSA 1978.

G. Stamps shall be affixed inside the boundaries

of New Mexico, unless the department has granted a license

allowing a person to affix stamps outside New Mexico."

HTRC/HB 984

Page 6