Rhode Island SB 470: AN ACT RELATING TO TAXATION - CIGARETTE TAX-MINIMUM PRICE OF CIGARETTES (Provides for a markup of fifteen percent (15%) and would be added to the total cost of cigarettes sold by a retailer.)

Bill Text

2017 -- S 0470
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LC001611
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2017
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A N A C T
RELATING TO TAXATION - CIGARETTE TAX-MINIMUM PRICE OF CIGARETTES
Introduced By: Senators Lombardo, Lombardi, and Archambault
Date Introduced: March 02, 2017
Referred To: Senate Finance

It is enacted by the General Assembly as follows:
SECTION 1. Chapter 44-20 of the General Laws entitled "Cigarette Tax" is hereby 1
amended by adding thereto the following section: 2
44-20-12.6. Minimum pricing of cigare tte s . 3
Notwithstanding any rule, regulation or state law to the contrary, a minimum markup of 4
fifteen percent (15%) shall be added to the total cost of cigarettes sold by a retailer. The total cost 5
shall include the invoice cost of the merchandise to the retailer plus the cigarette excise tax 6
imposed by §44-20-12 plus freight charges and cartage cost to the retail outlet if performed or 7
paid for by the retailer. The minimum markup of fifteen percent (15%) shall not be deemed to be 8
an unfair sales practice pursuant to chapter 13 of title 6. The tax administrator shall promulgate 9
rules and regulations consistent with the provisions of this section. 10
SECTION 2. Section 6-13-1 of the General Laws in Chapter 6-13 entitled "Unfair Sales 11
Practices" is hereby amended to read as follows: 12
6-13-1. De finitions . 13
(a) "Cost to the retailer" means the invoice cost of the merchandise to the retailer within 14
thirty (30) days prior to the date of the sale, or the replacement cost of the merchandise to the 15
retailer within thirty (30) days prior to the date of the sale, in the quantity last purchased, 16
whichever is lower; less all trade discounts except customary discounts for cash; to which shall be 17
added: 18
(1) Freight charges not otherwise included in the cost of the merchandise; 19

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(2) Cartage to the retail outlet if performed or paid for by the retailer, which cartage cost 1
shall be deemed to be three-fourths of one percent (0.75%) of the cost of the merchandise to the 2
retailer, unless the retailer claims and proves a lower cartage cost; and 3
(3) A markup to cover in part the cost of doing business, which markup, in the absence of 4
proof of a lesser cost, shall be six percent (6%) of the total cost at the retail outlet. 5
(b) "Cost to the wholesaler" means the invoice cost of the merchandise to the wholesaler 6
within thirty (30) days prior to the date of the sale, or the replacement cost of the merchandise to 7
the wholesaler within thirty (30) days prior to the date of the sale, in the quantity last purchased, 8
whichever is lower; less all trade discounts except customary discounts for cash; to which shall be 9
added: 10
(1) Freight charges not otherwise included in the cost of the merchandise; 11
(2) Cartage to the retail outlet if performed or paid for by the wholesaler, which cartage 12
cost shall be deemed to be three-fourths of one percent (0.75%) of the cost of the merchandise to 13
the wholesaler, unless the wholesaler claims and proves a lower cartage cost; and 14
(3) A markup to cover in part the cost of doing business, which markup, in the absence of 15
proof of a lesser cost, shall be two percent (2%) of the total cost at the wholesale establishment; 16
provided, for the sales of cigarettes there shall be a minimum markup of fifteen percent (15%). 17
(c) Where two (2) or more items are advertised; offered for sale; or sold at a combined 18
price; the price of each item shall be determined in the manner stated in subsections (a) and (b). 19
(d) "Sell at retail", "sales at retail", and "retail sale" mean and include any transfer of title 20
to tangible personal property for a valuable consideration made in the ordinary course of trade or 21
in the usual prosecution of the seller's business to the purchaser for consumption or use other than 22
resale or further processing or manufacturing. In this and in the preceding subsection the previous 23
terms shall include any transfer of property where title is retained by the seller as security for the 24
payment of the purchase price. 25
(e) "Retailer" means and includes every person, co-partnership, corporation, or 26
association engaged in the business of making sales at retail within this state; provided, that, in 27
the case of a retailer engaged in the business of making sales both at retail and at wholesale, the 28
term shall be applied only to the retail portion of the business. 29
(f) "Wholesaler" means and includes every person, partnership, corporation, or 30
association engaged in the business of making sales at wholesale within this state; provided, that, 31
in the case of a wholesaler engaged in the business of making sales both at wholesale and at 32
retail, the term shall be applied only to the wholesale portion of the business. 33
(g) Whenever any person, partnership, corporation, or association in the course of doing 34

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