Session of 1998
By Committee on Appropriations
            9             AN ACT relating to the taxation of cigarettes; increasing the rate thereof;
10             providing for disposition of revenues; establishing the children's health
11             care programs fund; amending K.S.A. 79-3310 and 79-3311 and re-
12             pealing the existing sections.
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 79-3310 is hereby amended to read as follows:
16       79-3310. There is imposed a tax upon all cigarettes sold, distributed or
17       given away within the state of Kansas. The rate of such tax shall be $.24
18       $.74 on each 20 cigarettes or fractional part thereof or $.30 $.925 on each
19       25 cigarettes, as the case requires. Such tax shall be collected and paid
20       to the director as provided in this act. Such tax shall be paid only once
21       and shall be paid by the wholesale dealer first receiving the cigarettes as
22       herein provided.
23           The taxes imposed by this act are hereby levied upon all sales of ciga-
24       rettes made to any department, institution or agency of the state of Kan-
25       sas, and to the political subdivisions thereof and their departments, insti-
26       tutions and agencies.
27           Sec. 2. K.S.A. 79-3311 is hereby amended to read as follows: 79-
28       3311. The director shall design and designate indicia of tax payment to
29       be affixed to each package of cigarettes as provided by this act. The di-
30       rector shall sell water applied stamps only to licensed wholesale dealers
31       in the amounts of 1,000 or multiples thereof. Stamps applied by the heat
32       process shall be sold only in amounts of 30,000 or multiples thereof,
33       except that such stamps which are suitable for packages containing 25
34       cigarettes each shall be sold in amounts prescribed by the director. Meter
35       imprints shall be sold only in amounts of 10,000 or multiples thereof.
36       Water applied stamps in amounts of 10,000 or multiples thereof and
37       stamps applied by the heat process and meter imprints shall be supplied
38       to wholesale dealers at a discount of 2.65% .086% from the face value
39       thereof, and shall be deducted at the time of purchase or from the re-
40       mittance therefor as hereinafter provided. Any wholesale cigarette dealer
41       who shall file with the director a bond, of acceptable form, payable to the
42       state of Kansas with a corporate surety authorized to do business in Kan-
43       sas, shall be permitted to purchase stamps, and remit therefor to the

HB 2994


  1       director within 30 days after each such purchase, up to a maximum out-
  2       standing at any one time of 85% of the amount of the bond. Failure on
  3       the part of any wholesale dealer to remit as herein specified shall be cause
  4       for forfeiture of such dealer's bond. All revenue received from the sale
  5       of such stamps or meter imprints shall be remitted to the state treasurer
  6       daily. Upon receipt thereof, the state treasurer shall deposit the entire
  7       amount thereof in the state treasury. The state treasurer shall first credit
  8       such amount thereof as the director shall order to the cigarette tax refund
  9       fund and shall credit the remaining balance to the state general fund. A
10       refund fund designated the cigarette tax refund fund not to exceed
11       $10,000 at any time shall be set apart and maintained by the director from
12       taxes collected under this act and held by the state treasurer for prompt
13       payment of all refunds authorized by this act. Such cigarette tax refund
14       fund shall be in such amount as the director shall determine is necessary
15       to meet current refunding requirements under this act.
16           The wholesale cigarette dealer shall affix to each package of cigarettes
17       stamps or tax meter imprints required by this act prior to the sale of
18       cigarettes to any person, by such dealer or such dealer's agent or agents,
19       within the state of Kansas. The director is empowered to authorize whole-
20       sale dealers to affix revenue tax meter imprints upon original packages of
21       cigarettes and is charged with the duty of regulating the use of tax meters
22       to secure payment of the proper taxes. No wholesale dealer shall affix
23       revenue tax meter imprints to original packages of cigarettes without first
24       having obtained permission from the director to employ this method of
25       affixation. If the director approves the wholesale dealer's application for
26       permission to affix revenue tax meter imprints to original packages of
27       cigarettes, the director shall require such dealer to file a suitable bond
28       payable to the state of Kansas executed by a corporate surety authorized
29       to do business in Kansas. The director may, to assure the proper collection
30       of taxes imposed by the act, revoke or suspend the privilege of imprinting
31       tax meter imprints upon original packages of cigarettes. All meters shall
32       be under the direct control of the director, and all transfer assignments
33       or anything pertaining thereto must first be authorized by the director.
34       All inks used in the stamping of cigarettes must be of a special type
35       devised for use in connection with the machine employed and approved
36       by the director. All repairs to the meter are strictly prohibited except by
37       a duly authorized representative of the director. Requests for service shall
38       be directed to the director. Meter machine ink imprints on all packages
39       shall be clear and legible. If a wholesale dealer continuously issues illeg-
40       ible cigarette tax meter imprints, it shall be considered sufficient cause
41       for revocation of such dealer's permit to use a cigarette tax meter.
42           A licensed wholesale dealer may, for the purpose of sale in another
43       state, transport cigarettes not bearing Kansas indicia of tax payment

HB 2994


  1       through the state of Kansas provided such cigarettes are contained in
  2       sealed and original cartons.
  3           New Sec. 3. On or before June 30, 1998, each wholesale dealer, retail
  4       dealer and vending machine operator shall file a report with the director
  5       in such form as the director may prescribe showing cigarettes, cigarette
  6       stamps and meter imprints on hand at 12:01 a.m. on June 1, 1998. A tax
  7       of $.50 on each 20 cigarettes or fractional part thereof or $.625 on each
  8       25 cigarettes, as the case requires and $.50 or $.625, as the case requires
  9       upon all tax stamps and all meter imprints purchased from the director
10       and not affixed to cigarettes prior to June 1, 1998, is hereby imposed and
11       shall be due and payable on or before June 30, 1998. The tax imposed
12       upon such cigarettes, tax stamps and meter imprints shall be imposed
13       only once under this act. The director shall remit all moneys collected
14       pursuant to this section to the state treasurer who shall credit the entire
15       amount thereof to the state general fund.
16           New Sec. 4. (a) On each October 1, January 1, April 1 and July 1,
17       the secretary of revenue shall certify to the director of accounts and re-
18       ports the amounts equal to the total revenues received by the secretary
19       and attributable to the increase in taxes imposed under sections 1, 2 and
20       3 and amendments thereto, imposed under this act and deposited in the
21       state treasury and credited to the state general fund during the preceding
22       three calendar months.
23           (b) Upon receipt of each certification under subsection (a), the di-
24       rector of accounts and reports shall transfer from the state general fund
25       to the children's health care programs fund the amount equal to the
26       amount certified.
27           (c) All transfers made in accordance with the provisions of this section
28       shall be considered to be demand transfers from the state general fund.
29           New Sec. 5. There is hereby established in the state treasury the
30       children's health care programs fund which shall be administered by the
31       secretary of social and rehabilitation services. All moneys credited to the
32       children's health care programs fund shall be used for the purposes of
33       providing additional funding for new or expanded children's health care
34       and health services, tobacco use prevention and cessation programs. All
35       expenditures from the children's health care programs fund shall be made
36       in accordance with appropriation acts upon warrants of the director of
37       accounts and reports issued pursuant to vouchers approved by the sec-
38       retary of social and rehabilitation services or the secretary's designee.
39           Sec. 6. K.S.A. 79-3310 and 79-3311 are hereby repealed.
40           Sec. 7. This act shall take effect and be in force from and after June
41       1, 1998, and its publication in the Kansas register.