HBA-JLV H.B. 3650 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3650 By: Thompson Ways and Means 4/4/2001 Introduced BACKGROUND AND PURPOSE Current state tax on other tobacco products (OTP) is levied at 35.213 percent of the manufacturer's list price and the tax is imposed when the permit holder receives OTPs for the purpose of making a first sale. Due to the marketing practices of some tobacco companies, ambiguities have developed regarding the manufacturer's list price and what constitutes the purpose of making a first sale. House Bill 3650 defines the purchase price of OTPs, shifts the payment of the tax from the permit holder to the distributor, and increases the levied tax to a 40 percent tax levied on the purchase price paid by the distributor. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 3650 amends the Tax Code to provide that a tax is imposed and becomes due and payable when a distributor in this state, rather than a permit holder, receives or possesses tobacco products other than cigars for the purpose of making a first sale in this state. The bill also increases the levied tax on tobacco products other than cigars from 35.213 percent of the manufacturer's list price to 40 percent of the purchase price paid by the distributor. EFFECTIVE DATE The Act takes effect on the 91st day after adjournment.