AN ACT Relating to the taxation of cigarettes and tobacco products; amending RCW 82.26.010, 82.26.020, 82.26.025, 19.91.300, 70.146.030, 82.02.030, and 82.32.265; adding a new section to chapter 82.26 RCW; creating a new section; repealing RCW 28A.47.440, 82.24.010, 82.24.020, 82.24.025, 82.24.027, 82.24.030, 82.24.040, 82.24.050, 82.24.060, 82.24.070, 82.24.080, 82.24.090, 82.24.100, 82.24.110, 82.24.120, 82.24.130, 82.24.140, 82.24.180, 82.24.190, 82.24.210, 82.24.230, 82.24.250, 82.24.260, 82.24.500, 82.24.510, 82.24.520, 82.24.530, 82.24.540, 82.24.550, 82.24.560, and 82.24.900; and providing effective dates.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 82.26.010, chapter 15, Laws of 1961 as amended by section 70, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.26.010 are each amended to read as follows:

As used in this chapter:

(1) "Tobacco products" means cigarettes, cigars, cheroots, stogies, periques, granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco, snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking((~~, but shall not include cigarettes as defined in RCW 82.24.010(4)~~));

(2) "Manufacturer" means a person who manufactures and sells tobacco products;

(3) "Distributor" means (a) any person engaged in the business of selling tobacco products in this state who brings, or causes to be brought, into this state from without the state any tobacco products for sale, (b) any person who makes, manufactures, or fabricates tobacco products in this state for sale in this state, (c) any person engaged in the business of selling tobacco products without this state who ships or transports tobacco products to retailers in this state, to be sold by those retailers;

(4) "Subjobber" means any person, other than a manufacturer or distributor, who buys tobacco products from a distributor and sells them to persons other than the ultimate consumers;

(5) "Retailer" means any person engaged in the business of selling tobacco products to ultimate consumers;

(6) "Sale" means any transfer, exchange, or barter, in any manner or by any means whatsoever, for a consideration, and includes and means all sales made by any person. It includes a gift by a person engaged in the business of selling tobacco products, for advertising, as a means of evading the provisions of this chapter, or for any other purposes whatsoever((.));

(7) "Wholesale sales price" means the established price for which a manufacturer sells a tobacco product to a distributor, exclusive of any discount or other reduction;

(8) "Business" means any trade, occupation, activity, or enterprise engaged in for the purpose of selling or distributing tobacco products in this state;

(9) "Place of business" means any place where tobacco products are sold or where tobacco products are manufactured, stored, or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train, or vending machine;

(10) "Retail outlet" means each place of business from which tobacco products are sold to consumers;

(11) "Department" means the state department of revenue;

(12) "Cigarette" means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and irrespective of the tobacco being flavored, adulterated, or mixed with any other ingredient, where such roll has a wrapper or cover made of paper or any material, except where such wrapper is wholly or in the greater part made of natural leaf tobacco in its natural state; and

(13) "Miscellaneous tobacco products" means tobacco products other than cigarettes.

Sec. 2. Section 82.26.020, chapter 15, Laws of 1961 as last amended by section 16, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.26.020 are each amended to read as follows:

(1) ((~~From and after June 1, 1971,~~))There is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all miscellaneous tobacco products in this state at the rate of forty-five percent of the wholesale sales price of such miscellaneous tobacco products. Such tax shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state miscellaneous tobacco products for sale, (b) makes, manufactures, or fabricates miscellaneous tobacco products in this state for sale in this state, or (c) ships or transports miscellaneous tobacco products to retailers in this state, to be sold by those retailers.

(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.

Sec. 3. Section 14, chapter 3, Laws of 1986 and RCW 82.26.025 are each amended to read as follows:

(1) In addition to the taxes imposed under RCW 82.26.020, there is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all miscellaneous tobacco products in this state at the rate of sixteen and three-fourths percent of the wholesale sales price of such miscellaneous tobacco products. Such tax shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state miscellaneous tobacco products for sale, (b) makes, manufactures, or fabricates miscellaneous tobacco products in this state for sale in this state, or (c) ships or transports miscellaneous tobacco products to retailers in this state, to be sold by those retailers.

(2) The moneys collected under this section shall be deposited in the water quality account under RCW 70.146.030 through June 30, 2021, and in the general fund thereafter.

NEW SECTION. Sec. 4. A new section is added tochapter 82.26 RCW to read as follows:

There is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all cigarettes in this state at the rate of forty-two percent of the wholesale sales price of such tobacco products. Such tax shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state cigarettes for sale, (b) makes, manufactures, or fabricates cigarettes in this state for sale in this state, or (c) ships or transports cigarettes to retailers in this state, to be sold by those retailers. Twenty-six percent of the moneys collected under this section shall be deposited in the water quality account under RCW 70.146.030 through June 30, 2021, and in the general fund thereafter. The balance of the moneys collected under this section shall be deposited in the general fund.

Sec. 5. Section 13, chapter 321, Laws of 1986 and RCW 19.91.300 are each amended to read as follows:

No person ((~~licensed to sell cigarettes under chapter 82.24 RCW~~)) may sell cigarettes, as defined in RCW 82.26.010, below the actual price paid. Violations of this section constitute unfair or deceptive acts or practices under the consumer protection act, chapter 19.86 RCW.

Sec. 6. Section 3, chapter 3, Laws of 1986 and RCW 70.146.030 are each amended to read as follows:

(1) The water quality account is hereby created in the state treasury. Moneys in the account may be used only in a manner consistent with this chapter. Moneys deposited in the account shall be administered by the department of ecology and shall be subject to legislative appropriation. Moneys placed in the account shall include tax receipts as provided in RCW ((~~82.24.027,~~)) 82.26.025, section 4 of this 1987 act, and 82.32.390, principal and interest from the repayment of any loans granted pursuant to this chapter, and any other moneys appropriated to the account by the legislature. All earnings from investment of balances in the water quality account, except as provided in RCW 43.84.090, shall be credited to the water quality account.

(2) The department may use or permit the use of any moneys in the account to make grants or loans to public bodies, including grants to public bodies as cost-sharing moneys in any case where federal, local, or other funds are made available on a cost-sharing basis, for water pollution control facilities and activities within the purposes of this chapter and for related administrative expenses. No more than three percent of the moneys deposited in the account may be used by the department to pay for the administration of the grant and loan program authorized by this chapter.

(3) The department shall present a progress report on the use of moneys from the account to the legislature no later than November 30th of each year.

Sec. 7. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 5, chapter 296, Laws of 1986 and RCW 82.02.030 are each amended to read as follows:

(1) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), 66.24.210(2), 66.24.290(2), 82.04.2901, 82.16.020(2), 82.26.020(2), 82.27.020(5), 82.29A.030(2), 82.44.020(5), and 82.45.060(2) shall be seven percent; and

(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent((~~; and~~

~~(3) The rate of the additional taxes under RCW 82.24.020(2) shall be fifteen percent~~)).

Sec. 8. Section 4, chapter 414, Laws of 1985 and RCW 82.32.265 are each amended to read as follows:

(1) The department may retain, by written contract, collection agencies licensed under chapter 19.16 RCW or licensed under the laws of another state or the District of Columbia for the purpose of collecting from sources outside the state of Washington taxes including interest and penalties thereon imposed under this title and RCW ((~~28A.47.440 and~~)) 84.33.041.

(2) Only accounts represented by tax warrants filed in the superior court of a county in the state as provided by RCW 82.32.210 may be assigned to a collection agency, and no such assignment may be made unless the department has previously notified or has attempted to notify the taxpayer of his or her right to petition for correction of assessment within the time provided and in accordance with the procedures set forth in chapter 82.32 RCW.

(3) Collection agencies assigned accounts for collection under this section shall have only those remedies and powers that would be available to them as assignees of private creditors. However, nothing in this section limits the right to enforce the liability for taxes lawfully imposed under the laws of this state in the courts of another state or the District of Columbia as provided by the laws of such jurisdictions and RCW 4.24.140 and 4.24.150.

(4) The account of the taxpayer shall be credited with the amounts collected by a collection agency before reduction for reasonable collection costs, including attorneys fees, that the department is authorized to negotiate on a contingent fee or other basis.

NEW SECTION. Sec. 9. The following acts or parts of acts are each repealed:

(1) Section 28A.47.440, chapter 223, Laws of 1969 ex. sess., section 1, chapter 70, Laws of 1971 ex. sess., section 1, chapter 157, Laws of 1972 ex. sess., section 2, chapter 189, Laws of 1983 and RCW 28A.47.440;

(2) Section 82.24.010, chapter 15, Laws of 1961 and RCW 82.24.010;

(3) Section 82.24.020, chapter 15, Laws of 1961, section 3, chapter 24, Laws of 1961 ex. sess., section 23, chapter 173, Laws of 1965 ex. sess., section 13, chapter 299, Laws of 1971 ex. sess., section 3, chapter 157, Laws of 1972 ex. sess., section 6, chapter 172, Laws of 1981, section 8, chapter 35, Laws of 1982 1st ex. sess., section 15, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.24.020;

(4) Section 2, chapter 59, Laws of 1979 ex. sess. and RCW 82.24.025;

(5) Section 12, chapter 3, Laws of 1986 and RCW 82.24.027;

(6) Section 82.24.030, chapter 15, Laws of 1961, section 61, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.030;

(7) Section 82.24.040, chapter 15, Laws of 1961, section 1, chapter 214, Laws of 1969 ex. sess. and RCW 82.24.040;

(8) Section 82.24.050, chapter 15, Laws of 1961, section 2, chapter 214, Laws of 1969 ex. sess. and RCW 82.24.050;

(9) Section 82.24.060, chapter 15, Laws of 1961 and RCW 82.24.060;

(10) Section 82.24.070, chapter 15, Laws of 1961, section 4, chapter 24, Laws of 1961 ex. sess., section 24, chapter 173, Laws of 1965 ex. sess., section 14, chapter 299, Laws of 1971 ex. sess. and RCW 82.24.070;

(11) Section 82.24.080, chapter 15, Laws of 1961, section 4, chapter 157, Laws of 1972 ex. sess. and RCW 82.24.080;

(12) Section 82.24.090, chapter 15, Laws of 1961, section 62, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.090;

(13) Section 82.24.100, chapter 15, Laws of 1961 and RCW 82.24.100;

(14) Section 82.24.110, chapter 15, Laws of 1961, section 63, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.110;

(15) Section 82.24.120, chapter 15, Laws of 1961, section 64, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.120;

(16) Section 82.24.130, chapter 15, Laws of 1961, section 5, chapter 157, Laws of 1972 ex. sess. and RCW 82.24.130;

(17) Section 82.24.140, chapter 15, Laws of 1961, section 65, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.140;

(18) Section 82.24.180, chapter 15, Laws of 1961, section 66, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.180;

(19) Section 82.24.190, chapter 15, Laws of 1961, section 67, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.190;

(20) Section 82.24.210, chapter 15, Laws of 1961, section 68, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.24.210;

(21) Section 82.24.230, chapter 15, Laws of 1961 and RCW 82.24.230;

(22) Section 6, chapter 157, Laws of 1972 ex. sess. and RCW 82.24.250;

(23) Section 13, chapter 3, Laws of 1986 and RCW 82.24.260;

(24) Section 4, chapter 321, Laws of 1986 and RCW 82.24.500;

(25) Section 5, chapter 321, Laws of 1986 and RCW 82.24.510;

(26) Section 6, chapter 321, Laws of 1986 and RCW 82.24.520;

(27) Section 7, chapter 321, Laws of 1986 and RCW 82.24.530;

(28) Section 8, chapter 321, Laws of 1986 and RCW 82.24.540;

(29) Section 9, chapter 321, Laws of 1986 and RCW 82.24.550;

(30) Section 10, chapter 321, Laws of 1986 and RCW 82.24.560; and

(31) Section 82.24.900, chapter 15, Laws of 1961 and RCW 82.24.900.

NEW SECTION. Sec. 10. Section 9 of this act shall not be construed as affecting any existing right acquired or liability or obligation incurred under the sections repealed in section 9 of this act or under any rule, regulation, or order adopted under those sections, nor as affecting any proceeding instituted under those sections.

NEW SECTION. Sec. 11. This act shall take effect January 1, 1988, except section 5 of this act shall take effect July 1, 1991.