Louisiana House Bill HB26

Louisiana 2016 1st Special Session

• Introduced: 2/14/16
• Refer: 2/14/16

Caption

Reduces the amount of the discount for accurately reporting and remitting excise taxes on certain tobacco products and the amount of the discount for stamping cigarettes (Item #22) (OR +$2,400,000 GF RV See Note)

Impact

The primary impact of HB 26 will be felt in the tobacco industry, particularly among wholesale dealers who utilize the current discount structure. By reducing the discount offered for timely and accurate tax remittance, the bill is expected to tighten the financial margins for these dealers, possibly leading to an increase in the retail price of tobacco products to maintain profitability. Additionally, the changes may affect how out-of-state dealers engage in commerce within Louisiana, as the reduced discount could disincentivize transactions across state lines.

Summary

House Bill 26 aims to amend existing regulations regarding the discounts available to tobacco dealers for the reporting and remitting of excise taxes on tobacco products. Specifically, the bill proposes to reduce the discount rates for both accurately reporting and timely remitting these taxes from 6% to 3%, which will affect both in-state and out-of-state wholesale tobacco dealers. This legislative change is positioned as a means to potentially increase state revenue collected from tobacco taxes by lowering the financial incentive for these dealers to underreport their transactions.

Sentiment

General sentiment surrounding HB 26 appears to be cautious, with supporters emphasizing the need for fair tax collection and heightened compliance amongst tobacco dealers. However, opponents argue that reducing the discount may stifle business operations and complicate the industry landscape. As tobacco taxes are critical sources of state revenue, the discussions surrounding this bill highlight a tension between governmental fiscal responsibility and the operational realities faced by tobacco businesses.

Contention

Notable points of contention include the potential consequences for local tobacco markets, as reduced discounts could disproportionately affect smaller dealers compared to larger competitors. There is also concern about whether the bill's provisions might unintentionally lead to illegal sales or black-market activity, as dealers adjust to the changed financial implications of compliance with tax reporting requirements. The balance between increasing state revenues while supporting lawful business practices is a central theme of the debates surrounding this bill.