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STARTING
IN JANUARY 2007
Texas
Legislature Increases Cigarette Tax and
Cigars and Tobacco Products Taxes
June
2006
House
Bill 5, enacted by the 79th Texas Legislature in the recent
special session, increases the excise tax on cigarettes weighing three
pounds or less per thousand to $1.41 for a pack of 20 cigarettes and
to $1.76 for a pack of 25. House Bill 5 also increases the excise tax
on tobacco products other than cigars (smoking and chewing tobacco and
snuff) to 40 percent of the manufacturer's list price, exclusive of
any trade discount, special discount, or deal. Both increases become
effective January 1, 2007.
House
Bill 2, also enacted in the same special session, allocates the
additional revenue collected from the cigarette tax and other tobacco
products tax increases to the property tax relief fund. The bill is
effective September 1, 2006.
Cigarettes
On
January 1, 2007, all cigarette distributors, wholesalers, and
retailers must immediately inventory their cigarette packages and any
unused stamps of the old denomination and file a report of the
inventory with the Comptroller on or before January 31, 2007.
When filing their inventory report, distributors, wholesalers, and
retailers having 2000 or more cigarettes in packages with stamps of
the old denomination must pay the increased additional tax due by
cashier's check, electronic funds transfer, or by any other method of
payment authorized by the Comptroller.
Prior
to January 1, 2007, the Comptroller's office will mail to each
cigarette distributor, wholesaler, and retailer a report form to
assist them with reporting the inventory information. Each
distributor, wholesaler, and retailer must keep a copy of the
completed inventory report form and, if remitting a payment, must be
able to document the method of payment used.
Other
Tobacco Products
The
new tobacco products excise tax rate of 40 percent of the
manufacturer's list price, exclusive of any trade discount, special
discount, or deal, applies to all smoking and chewing tobacco and
snuff products (not cigars) distributors receive on and after January 1,
2007. The monthly distributor's report that the Comptroller mails to
distributors each month will include the new excise tax rate starting
with the January 2007 report. The report and any required payment
are due to the Comptroller's office on or before February 28,
2007.
If you have any
questions or need more information on this change, contact the
Comptroller’s office toll free at 1-800-862-2260
Important
Links to Tax Increase Information
 Link
to a one-page printable PDF of the Comptroller's Notice to Retailers
and Wholesales of Cigarettes and Tobacco Products regarding the
legislated tax increases
Link
to the Texas Comptroller's website notice of the Texas Legislature
Increasing Cigarette Tax and Cigars and Tobacco Products Tax
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