Legislature(2003 - 2004)

2004-05-11 Senate Journal

Full Journal pdf

2004-05-11                     Senate Journal                      Page 3726
HB 503                                                                                            
HOUSE BILL NO. 503 "An Act relating to the tobacco product                                          
Master Settlement Agreement; and providing for an effective date"                                   
was read the third time.                                                                            
                                                                                                    

2004-05-11                     Senate Journal                      Page 3727
Senator Bunde moved that the bill be returned to second reading for                                 
the purpose of a specific amendment, that being Amendment No. 1.                                    
Without objection, the bill was returned to second reading.                                         
                                                                                                    
Senator Wilken, Bunde, Ben Stevens, Seekins, Gary Stevens, Dyson,                                   
Elton, Ellis, Lincoln, Guess, Stedman, Cowdery offered Amendment                                    
No. 1:                                                                                              
                                                                                                    
Page 1, line 1, following "relating to":                                                          
            Insert "taxes on cigarettes and tobacco products, to tax                              
stamps on cigarettes, to forfeiture of cigarettes and of property                                 
used in the manufacture, transportation, facilitation of                                          
transportation, possession, offering for sale, or sale of unstamped                               
cigarettes, to unfair cigarette sales, and to licenses and licensees                              
under the Cigarette Tax Act;"                                                                     
                                                                                                    
Page 1, line 3:                                                                                     
            Insert new bill sections to read:                                                       
"* Section 1.  AS 43.50.030(d) is amended to read:                                                
                         (d)  For each license issued to a direct-buying                            
            retailer, and for each renewal, the fee is $50 [$25].                               
   * Sec. 2.  AS 43.50.035 is repealed and reenacted to read:                                     
                         Sec. 43.50.035.  Wholesaler-distributor license.  (a)                    
            A person outside of this state who sells or distributes                                 
            cigarettes into this state and is not required to be licensed                           
            under AS 43.50.010 may apply for a wholesaler-distributor                               
            license.                                                                                
                         (b)  A person outside of this state who sells or                           
            distributes cigarettes into this state, who is not required to be                       
            licensed under AS 43.50.010, and who wishes to purchase                                 
            stamps under this chapter shall be licensed as a wholesaler-                            
            distributor.                                                                            
                         (c)  The department shall adopt reasonable                                 
            regulations necessary for the collection of cigarette taxes on                          
            cigarette sales or distributions made by a wholesaler-                                  
            distributor licensee into this state and standards for                                  
                                     (1)  application and issuance of the license;                  
            and                                                                                     
                                     (2)  refusal to issue the license.                             
   * Sec. 3.  AS 43.50.090(a) is amended to read:                                                 

2004-05-11                     Senate Journal                      Page 3728
                         (a)  There is levied an excise tax of 38 mills on each                     
            cigarette imported or acquired in the state. The tax shall be                           
            paid through the use of stamps as provided in AS 43.50.500 -                            
            43.50.700.  A person who imports or acquires cigarettes in                          
            the state upon which a stamp required by this chapter has                           
            not been affixed in accordance with AS 43.50.500 -                                  
            43.50.700, who fails to apply to purchase stamps as                                 
            required by AS 43.50.540(a), and who fails to pay the tax                           
            through the use of stamps is not relieved [THE FAILURE                              
            TO PAY THE TAX THROUGH THE USE OF STAMPS                                                
            DOES NOT RELIEVE A PERSON] of the obligation to pay                                     
            taxes due under this chapter.  The person shall still pay the                           
            tax, and the tax is due on or before the end of the month                               
            following the month in which cigarettes were manufactured,                              
            imported, acquired, or sold in this state.  Cigarettes upon                             
            which the excise is imposed are not again subject to the excise                         
            when acquired by another person.                                                        
   * Sec. 4.  AS 43.50.170(1) is amended to read:                                                 
                                     (1)  "buyer" means a person who imports or                     
            acquires cigarettes for the person's own consumption from                               
            any source other than a manufacturer, distributor, direct-                              
            buying retailer, [OR] retailer, or wholesaler-distributor;                          
   * Sec. 5.  AS 43.50.170(3) is amended to read:                                                 
                                     (3)  "direct-buying retailer" means a person                   
            who is engaged in the sale of cigarettes at retail in this state,                       
            and who brings cigarettes or causes cigarettes to be brought                    
            [CIGARETTES] into the state that are not purchased from                             
            a wholesaler-distributor;                                                           
   * Sec. 6.  AS 43.50.170(4) is amended to read:                                                 
                                     (4)  "distributor" means a person who brings                   
            cigarettes that are not purchased from a wholesaler-                                
            distributor, or has cigarettes that are not purchased from a                    
            wholesaler-distributor brought into the state, and who sells                        
            or distributes at least 75 percent [PER CENT] of the                                
            cigarettes to others for resale in the state;                                           
   * Sec. 7.  AS 43.50.170(12) is amended to read:                                                
                                     (12)  "wholesaler-distributor" means a                         
            person outside this state who sells or distributes cigarettes into                      
            this state, [AND] who is not required to be licensed under                          
            AS 43.50.010, and who is licensed under AS 43.50.035.                               

2004-05-11                     Senate Journal                      Page 3729
   * Sec. 8.  AS 43.50.190(a) is amended to read:                                                 
                         (a)  There is levied an excise tax of 62 [12] mills on                 
            each cigarette imported or acquired in this state.                                      
   * Sec. 9.  AS 43.50.300 is amended to read:                                                    
                         Sec. 43.50.300.  Excise tax levied.  An excise tax is                    
            levied on tobacco products in the state at the rate of 100 [75]                     
            percent of the wholesale price of the tobacco products. The                             
            tax is levied when a person                                                             
                                     (1)  brings, or causes to be brought, a                        
            tobacco product into the state from outside the state for sale;                         
                                     (2)  makes, manufactures, or fabricates a                      
           tobacco product in the state for sale in the state; [OR]                                
                                     (3)  ships or transports a tobacco product to a                
            retailer in the state for sale by the retailer or to an individual                  
            for personal consumption; or                                                        
                                     (4)  brings, or causes to be brought, a                    
            tobacco product into the state from outside the state for                           
            personal consumption.                                                               
   * Sec. 10.  AS 43.50.320(a) is repealed and reenacted to read:                                 
                         (a)  Except as provided in (g) of this section, a person                   
            engaging in an activity described in AS 43.50.300(1) - (3)                              
            must be licensed by the department as a distributor, and a                              
            person engaging in an activity described in AS 43.50.300(4)                             
            must be licensed as a buyer.                                                            
   * Sec. 11.  AS 43.50.320(b) is amended to read:                                                
                         (b)  The department, upon application and payment                          
            of a fee of $50, shall issue a license for one year to a person                         
            who applies for a distributor license [UNDER (a) OF THIS                            
            SECTION].  The department, upon application and                                     
            payment of a fee of $25, shall issue a license for one year to                      
            a person who applies for a buyer license.                                           
   * Sec. 12.  AS 43.50.320(d) is amended to read:                                                
                         (d)  A distributor license issued under this section                   
            must include the name and address of the licensee, the type of                          
            business to be conducted, and the year for which the license is                         
            issued.                                                                                 
   * Sec. 13.  AS 43.50.320(e) is amended to read:                                                
                         (e)  The department may renew a distributor license                    
            issued under this section for a fee of $50.  The department                         
            may renew a buyer license issued under this section for a                           

2004-05-11                     Senate Journal                      Page 3730
            fee of $25.                                                                         
   * Sec. 14.  AS 43.50.330(a) is amended to read:                                                
                         (a)  On or before the last day of each calendar month,                     
            a licensee shall file a return with the department. The return                          
            must state the number or amount of tobacco products sold or                         
            imported for personal consumption by the licensee during                            
            the preceding calendar month, the selling price or purchase                         
            price of the tobacco products, and the amount of tax imposed                        
            on the tobacco products.                                                                
   * Sec. 15.  AS 43.50.390(2) is amended to read:                                                
                                     (2)  "licensee" means a distributor or buyer               
            who is                                                                                  
                                                 (A)  licensed under AS 43.50.320;                  
                         or                                                                         
                                                 (B)  exempted by AS 43.50.320(g)                   
                      from licensing under AS 43.50.320;                                           
   * Sec. 16.  AS 43.50.390 is amended by adding a new paragraph to                               
read:                                                                                               
                                     (6)  "buyer" means a person who imports                        
            tobacco products for the person's own consumption from any                              
            source other than a licensee.                                                           
   * Sec. 17.  AS 43.50.540(f) is amended to read:                                                
                         (f)  Title to the stamps passes immediately to the                         
            licensee at the time the stamps are obtained in person or, if the                       
            stamps are shipped or transported, at the time the stamps are                           
            placed in the United States mail or received by the common or                           
            private carrier. The licensee bears all costs associated with                           
            shipping or transporting the stamps.  The department may                            
            replace stamps lost or damaged in transit if the licensee                           
            provides proof acceptable to the department verifying that                          
            the loss or damage occurred while the stamps were in the                            
            possession of the shipping company and the shipping                                 
            company substantiates the loss or damage.  Damaged                                  
            stamps must be returned to the department before the                                
            department may replace them [AND ALL RISKS OF                                       
            POSSIBLE LOSS OR DAMAGE WHILE IN TRANSIT].                                              
   * Sec. 18.  AS 43.50.550(b) is amended to read:                                                
                         (b)  A licensee who submits an application for the                         
            purchase of stamps on a deferred-payment basis shall, as a                          
            condition of approval of the application, post a bond                               

2004-05-11                     Senate Journal                      Page 3731
            acceptable to the department in an amount equal to                                      
                                     (1)  200 percent of the maximum dollar                     
            amount of allowed monthly purchases under this section; or                          
                                     (2)  100 percent of the maximum dollar                     
            amount of allowed monthly purchases under this section if                           
            the licensee                                                                        
                                                 (A)  holds a license issued under              
                         AS 43.50.010 for a physical location in this state;                    
                         and                                                                    
                                                 (B)  has been in full compliance               
                         with the provisions of this title and regulations                      
                         adopted under this title during the preceding 60                       
                         months [AS A CONDITION OF APPROVAL OF                                  
                         THE APPLICATION].                                                          
   * Sec. 19.  AS 43.50.580(b) is amended to read:                                                
                         (b)  A licensee may possess unstamped cigarettes in                        
            this state if                                                                           
                                     (1)  the licensee posts a surety bond in an                    
            amount satisfactory to the department to ensure performance                             
            of its duties under this chapter; and                                                   
                                     (2)  unstamped cigarettes are necessary for                    
            the conduct of the licensee's business in making sales or                               
            distributions                                                                           
                                                 (A)  to an instrumentality of the              
                         federal government or an Indian tribal organization                        
                         authorized by law to possess cigarettes not taxed                          
                         under this chapter; or                                                 
                                                 (B)  to customers outside the state            
                         and the licensee provides proof acceptable to the                      
                         department that the licensee is properly licensed                      
                         in the jurisdictions outside the state where the                       
                         sales or distributions are made.                                       
   * Sec. 20.  AS 43.50.590(a) is amended to read:                                                
                         (a)  The department shall adopt procedures for a                           
            refund or credit to a licensee in the amount of the                                     
            denominated value, less the discount given under                                        
            AS 43.50.540, for                                                                       
                                     (1)  unused or damaged stamps; [OR]                            
                                     (2)  stamps affixed to cigarette packages that                 
            have become unfit for use or sale, are destroyed, or are                                

2004-05-11                     Senate Journal                      Page 3732
            returned to the manufacturer for credit or replacement if the                           
            licensee provides proof acceptable to the department that the                           
            cigarettes have not been and will not be consumed in this                               
            state; or                                                                           
                                     (3)  stamps affixed to cigarette packages                  
            that are sold or distributed outside the state if the licensee                      
            provides proof acceptable to the department that the                                
            cigarettes have not been and will not be consumed in this                           
            state and the licensee is properly licensed in the                                  
            jurisdictions outside the state where the sales or                                  
            distributions are made.                                                             
   * Sec. 21.  AS 43.50 is amended by adding a new section to read:                               
                         Sec. 43.50.625.  Forfeiture of other property.  (a)                      
            Upon a showing of probable cause that a person has                                      
            committed the crime of misconduct involving unstamped                                   
            cigarettes or stamps in the first degree under AS 43.50.640,                            
            the following are subject to forfeiture:                                                
                                     (1)  material and equipment used in the                        
            manufacture, sale, offering for sale, or possession for sale of                         
            cigarettes in this state in violation of AS 43.50.500 -                                 
            43.50.640 or 43.50.660 - 43.50.700;                                                     
                                     (2)  aircraft, vehicles, or vessels used to                    
            transport or facilitate the transportation of cigarettes                                
            manufactured, sold, offered for sale, or possessed for sale in                          
            this state in violation of AS 43.50.500 - 43.50.640 or                                  
            43.50.660 - 43.50.700;                                                                  
                                     (3)  money, securities, negotiable                             
            instruments, or other things of value used in financial                                 
            transactions derived from activity prohibited under                                     
            AS 43.50.500 - 43.50.640 or 43.50.660 - 43.50.700.                                      
                         (b)  Property subject to forfeiture under this section                     
            may be actually or constructively seized under an order issued                          
            by the superior court upon a showing of probable cause that                             
            the property is subject to forfeiture under this section.                               
            Constructive seizure is effected upon posting a signed notice                           
            of seizure on the item to be forfeited, stating the violation and                       
            the date and place of seizure.  Seizure without a court order                           
            may be made if                                                                          
                                     (1)  the seizure is incident to a valid arrest or              
            search;                                                                                 

2004-05-11                     Senate Journal                      Page 3733
                                     (2)  the property subject to seizure is the                    
            subject of a prior judgment in favor of the state; or                                   
                                     (3)  there is probable cause to believe that                   
            the property is subject to forfeiture under (a) of this section;                        
            property seized under this paragraph may be held for not more                           
            than 48 hours unless an order of forfeiture is issued by the                            
            court before the end of that time period.                                               
                         (c)  Within 30 days after a seizure under this section,                    
            the Department of Public Safety shall make reasonable efforts                           
            to ascertain the identity and whereabouts of any person                                 
            holding an interest, or an assignee of a person holding an                              
            interest, in the property seized, including a right to possession,                      
            or a lien, mortgage, or conditional sales contract.  The                                
            Department of Public Safety shall notify the person                                     
            ascertained to have an interest in the seized property of the                           
            impending forfeiture, and, before forfeiture, the Department                            
            of Public Safety shall publish, once a week for four                                    
            consecutive calendar weeks, a notice of the impending                                   
            forfeiture in a newspaper of general circulation in the judicial                        
            district in which the seizure was made, or if a newspaper is                            
            not published in that judicial district, in a newspaper                                 
            published in the state and distributed in that judicial district.                       
                         (d)  Property subject to forfeiture under (a) of this                      
            section may be forfeited                                                                
                                     (1)  upon conviction of a person for a                         
            violation of AS 43.50.640; or                                                           
                                     (2)  upon judgment by the superior court in a                  
            proceeding in rem that the property was used in a manner                                
            subjecting it to forfeiture under (a) of this section.                                  
                         (e)  The owner of property subject to forfeiture under                     
            (a) of this section is entitled to relief from the forfeiture in the                    
            nature of remission of the forfeiture if, in an action under (d)                        
            of this section,  the owner shows that the owner                                        
                                     (1)  was not a party to the violation;                         
                                     (2)  did not have actual knowledge or                          
            reasonable cause to believe that the property was used or was                           
            to be used in violation of the law; and                                                 
                                     (3)  did not have actual knowledge or                          
            reasonable cause to believe that the person committing the                              
            violation had, within the last 10 years,                                                

2004-05-11                     Senate Journal                      Page 3734
                                                 (A)  a criminal record for violating               
                         this chapter; or                                                           
                                                 (B)  committed other violations of                 
                         this chapter.                                                              
                         (f)  The court may allow the owner of property that is                     
            subject to forfeiture under (a) of this section to redeem the                           
            property by paying an amount determined by the court to be                              
            the fair market value of the property.                                                  
                         (g)  A person other than the owner holding, or the                         
            assignee of, a lien, mortgage, or conditional sales contract on,                        
            or the right to possession of property subject to forfeiture                            
            under (a) of this section is entitled to relief from the forfeiture                     
            in the nature of remission of the forfeiture if, in an action                           
            under (d) of this section, the person shows that the person                             
                                     (1)  was not a party to the violation                          
            subjecting the property to forfeiture;                                                  
                                     (2)  did not have actual knowledge or                          
            reasonable cause to believe that the property was used or was                           
            to be used in violation of the law; and                                                 
                                     (3)  did not have actual knowledge or                          
            reasonable cause to believe that the person committing the                              
            violation had, within the last 10 years,                                                
                                                 (A)  a criminal record for violating               
                         this chapter; or                                                           
                                                 (B)  committed other violations of                 
                         this chapter.                                                              
                         (h)  It is not a defense in an in rem forfeiture                           
            proceeding brought under (d)(2) of this section that a criminal                         
            proceeding is pending or has resulted in conviction or                                  
            acquittal of a person charged with violating AS 43.50.640.                              
                         (i)  Property forfeited under this section shall be                        
            placed in the custody of the commissioner of public safety for                          
            disposition according to an order entered by the court.  The                            
            court shall order destroyed any property forfeited under this                           
            section that is harmful to the public and may order any                                 
            property forfeited under this section that was seized in a                              
            municipality to be transferred to the municipality in which the                         
            property was seized or to another municipality affected by the                          
            crime for which the property was forfeited.  The state shall                            
            notify all municipalities affected by the crime of the forfeiture                       

2004-05-11                     Senate Journal                      Page 3735
            proceeding.  Other property shall be ordered sold and the                               
            proceeds used for payment of expenses of the proceedings for                            
            forfeiture and sale, including expenses of seizure, custody,                            
            and court costs.  The remainder of the proceeds shall be                                
            deposited in the general fund.                                                          
      (j)  The title to a vehicle or vessel forfeited to the state under this                       
section may be transferred by the state to a municipality or the local                              
governing body of a village for official use by the municipality or                                 
village, on condition that the vehicle or vessel not be available for use                           
by the defendant.                                                                                   
   * Sec. 22.  AS 43.50.640(a) is amended to read:                                                
                         (a)  A person commits the crime of misconduct                              
            involving unstamped cigarettes or stamps in the first degree if                         
            the person                                                                              
                                     (1)  with reckless disregard that the                          
            cigarettes are unstamped                                                                
                                                 (A)  sells or distributes 5,000                
                         [1,000] or more unstamped cigarettes in a single                           
                         transaction;                                                               
                                                 (B)  owns or possesses 5,000                   
                         [1,000] or more unstamped cigarettes with the intent                       
                         to sell; or                                                                
                                                 (C)  acquires, holds, transports,                  
                         imports, or possesses 10,000 or more unstamped                             
                         cigarettes; or                                                             
                                     (2)  with reckless disregard that the stamp                    
            was previously affixed to another cigarette package[;]                                 
                                                 (A)  affixes a previously used stamp               
                         to a cigarette package; or                                                 
                                                 (B)  possesses, sells, or distributes a            
                         previously used stamp.                                                     
   * Sec. 23.  AS 43.50.650(a) is amended to read:                                                
                         (a)  A person commits the crime of misconduct                              
            involving unstamped cigarettes or stamps in the second                                  
            degree if the person                                                                    
                                     (1)  with reckless disregard that the                          
            cigarettes are unstamped                                                                
                                                 (A)  sells or distributes at least one             
                         but fewer than 5,000 [1,000] unstamped cigarettes in                   
                         a single transaction;                                                      

2004-05-11                     Senate Journal                      Page 3736
                                                 (B)  owns or possesses at least one                
                         but fewer than  5,000 [1,000] unstamped cigarettes,                    
                         with intent to sell; or                                                    
                                                 (C)  acquires, holds, transports,                  
                         imports, or possesses at least one but fewer than                          
                         10,000 unstamped cigarettes; or                                            
                                     (2)  is not licensed under this chapter or                     
            otherwise authorized by the department to possess stamps and                            
            possesses a stamp that is not affixed to a cigarette package.                           
   * Sec. 24.  AS 43.50.710 is amended by adding a new subsection to                              
read:                                                                                               
                         (e)  Nothing in this section prohibits a manufacturer                      
            from offering promotions to a wholesaler or a retailer                                  
            provided the wholesale promotion is the same for all                                    
            participating wholesalers and the retail promotion is the same                          
            for all participating retailers.                                                        
   * Sec. 25.  AS 43.50.720 is amended to read:                                                   
                         Sec. 43.50.720.  Sale at less than cost; with gift or                    
            concession. In all advertisements, offers for sale, or sales                          
            involving two or more items when at least one of the items is                           
            cigarettes at a combined price, and in all advertisements,                              
            offers for sale, or sales involving the giving of any gift,                             
            concession, or coupon of any kind in conjunction with the sale                          
            of cigarettes, the wholesaler's or retailer's combined selling                          
            price may not be below the actual cost to the wholesaler or the                         
            actual cost to the retailer, respectively, of the total of all                          
            articles, products, commodities, gifts, and concessions                                 
            included in the transactions, except that, if any articles,                             
            products, commodities, gifts, or concessions are not                                    
            cigarettes, the actual [BASIC] cost shall be determined as                          
            provided under AS 43.50.800.                                                            
   * Sec. 26.  AS 43.50.760(b) is amended to read:                                                
                         (b)  The presumptive actual [WHOLESALE AND                             
            PRESUMPTIVE RETAIL] cost of cigarettes as determined                                    
            by the department under AS 43.50.800 [FROM THE                                      
            MANUFACTURER'S PRICE LIST] is considered competent                                      
            evidence in a court action or proceeding as tending to prove                            
            actual cost to the wholesaler or retailer complained against.  A                        
            party against whom the presumptive actual [WHOLESALE                                
            OR PRESUMPTIVE RETAIL] cost as determined by the                                        

2004-05-11                     Senate Journal                      Page 3737
            department is introduced in evidence has the right to offer                             
            evidence tending to prove any inaccuracy of the presumptive                             
            actual [WHOLESALE OR PRESUMPTIVE RETAIL] cost                                       
            or any statement of facts that would impair its probative                               
            value.                                                                                  
   * Sec. 27.  AS 43.50.770 is amended to read:                                                   
                         Sec. 43.50.770.  Determination of cost of cigarettes                     
            purchased outside of ordinary channels of trade.  In                                  
            establishing the actual [BASIC] cost of cigarettes to a                             
            wholesaler or retailer, the invoice cost [OR THE ACTUAL                                 
            COST] of cigarettes purchased at a forced, bankrupt, or                                 
            closeout sale, or other sale outside the ordinary channels of                           
            trade may not be used.                                                                  
   * Sec. 28.  AS 43.50.790(a) is amended to read:                                                
                         (a)  The department                                                        
                                     (1)  shall administer AS 43.50.710 -                           
            43.50.849;                                                                              
                                     (2)  may adopt regulations relating to the                     
            administration and enforcement of AS 43.50.710 - 43.50.849;                             
                                     (3)  may determine the actual [BASIC] cost                 
            of cigarettes to a wholesaler or retailer as provided in                            
            AS 43.50.800 [FROM INFORMATION OBTAINED FROM                                        
            A MANUFACTURER];                                                                        
                                     (4)  may, after reasonable notice and hearing,                 
            revoke or suspend a license issued under AS 43.50.010 or                                
            43.50.035 to a person who refuses or neglects to comply with                            
            a provision of AS 43.50.710 - 43.50.849.                                                
   * Sec. 29.  AS 43.50.800 is repealed and reenacted to read:                                    
                         Sec. 43.50.800.  Presumptions applicable to                              
            determination of cost.  (a)  The presumptive actual cost of                           
            cigarettes to a wholesaler is, for purposes of AS 43.50.710 -                           
            43.50.849, the presumptive wholesale cost as calculated by                              
            the department plus an amount equal to four and one-half                                
            percent of the presumptive wholesale cost to account for                                
            business costs.  For purposes of this section, the presumptive                          
            wholesale cost is the manufacturer's list price, less trade                             
          discounts, plus the full face value of all cigarette taxes.                              
                         (b)  The presumptive actual cost of cigarettes to a                        
            retailer is, for purposes of AS 43.50.710 - 43.50.849, the                              
            presumptive actual cost of cigarettes to the wholesaler as                              

2004-05-11                     Senate Journal                      Page 3738
            calculated by the department under (a) of this section, plus an                         
            amount equal to six percent of the presumptive actual cost of                           
            cigarettes to the wholesaler to account for business costs.                             
                         (c)  A wholesaler or retailer that wishes to advertise,                    
            offer to sell, or sell cigarettes at less than the presumptive                          
            actual cost to the wholesaler or retailer as calculated under (a)                       
            or (b) of this section must first obtain approval from the                              
            department.  The department may grant approval only if the                              
            wholesaler or retailer provides proof satisfactory to the                               
            department that the wholesaler or retailer's actual cost is lower                       
            than presumed.  Approval for cigarette sales at less than the                           
            presumptive actual cost as determined under (a) or (b) of this                          
            section may not be granted for a period longer than one year.                           
            In reviewing proof of actual wholesale or retail cost, the                              
            department may consider the costs reflected on the actual                               
            invoice, but may not consider cash discounts.  In reviewing                             
            proof of actual costs, the department may consider the                                  
            standards and methods of accounting regularly employed, and                             
            must include labor costs, rent, depreciation, selling costs,                            
            maintenance of equipment, delivery costs, all types of                                  
            licenses, taxes, insurance, advertising, preopening expenses,                           
            provision for impaired assets and closing costs, interest                               
            expenses, and provision for merger and restructuring                                    
            expenses.  The department shall adopt regulations under                                 
            which the wholesaler's and retailer's actual costs are                                  
             determined for purposes of AS 43.50.710 - 43.50.849."                                 
                                                                                                    
Renumber the following bill sections accordingly.                                                   
                                                                                                    
Page 3, following line 22:                                                                          
            Insert new bill sections to read:                                                       
"* Sec. 33.  The uncodified law of the State of Alaska enacted in sec.                            
4, ch. 48, SLA 1997, is repealed and reenacted to read:                                             
                         Sec. 4.AS 43.50.190(a) is repealed and reenacted to                        
            read:                                                                                   
            (a)  There is levied an excise tax of 97.5 mills on each                                
cigarette imported or acquired in this state.                                                       
   * Sec. 34.  AS 43.50.740(b), 43.50.849(1), 43.50.849(6), and                                   
43.50.849(7) are repealed."                                                                         
                                                                                                    

2004-05-11                     Senate Journal                      Page 3739
Renumber the following bill sections accordingly.                                                   
                                                                                                    
Page 3, line 25:                                                                                    
            Delete "Section 2"                                                                      
            Insert "Section 31"                                                                     
                                                                                                    
Page 3, line 26:                                                                                    
            Delete "sec. 1"                                                                         
            Insert "sec. 30"                                                                        
                                                                                                    
Page 3, line 28:                                                                                    
            Delete "Section 3"                                                                      
            Insert "Section 32"                                                                     
            Delete "sec. 1"                                                                         
            Insert "sec. 30"                                                                        
                                                                                                    
Page 3, line 29:                                                                                    
            Delete "sec. 2"                                                                         
            Insert "sec. 31"                                                                        
                                                                                                    
Page 3, line 30:                                                                                    
            Delete all material.                                                                    
            Insert a new bill section to read:                                                      
"* Sec. 36.  The uncodified law of the State of Alaska is amended by                              
adding a new section to read:                                                                       
            TRANSITION:  FLOOR STOCK TAX FOR CERTAIN                                                
CIGARETTES IN THE STATE ON THE EFFECTIVE DATE OF                                                    
THIS SECTION.  (a)  Notwithstanding any other provision to the                                      
contrary, a floor stock tax is imposed at 12:01 a.m. on the effective                               
date of this section upon every person in control or possession of                                  
cigarettes for sale or distribution in the state that were taxed at the rate                        
in effect before the effective date of this section.  The floor stock tax is                        
the difference between the tax computed on each cigarette as provided                               
in AS 43.50.190, as amended by sec. 8 of this Act, on the effective                                 
date of this section and the tax actually paid on each cigarette as                                 
required by AS 43.50.190 as it read on the day before the effective                                 
date of this section.  The person subject to the floor stock tax under                              
this section must provide proof that the tax required by AS 43.50.190,                              
as it read on the day before the effective date of this section, on each                            
cigarette was previously paid or the tax actually paid on each cigarette                            

2004-05-11                     Senate Journal                      Page 3740
is considered to be zero.                                                                           
            (b)  A person subject to the floor stock tax under this section                         
shall file a report on a form prescribed by the Department of Revenue                               
and pay the tax to the Department of Revenue in six sequential                                      
monthly installments.  The first installment shall be paid not later than                           
the last day of the month in which this section takes effect.  The                                  
penalty, interest, and taxpayer remedy provisions of AS 43.05 apply to                              
the floor stock tax under this section."                                                            
                                                                                                    
Renumber the following bill sections accordingly.                                                   
                                                                                                    
Page 3, line 31:                                                                                    
            Delete "sec. 2"                                                                         
            Insert "sec. 31"                                                                        
            Delete "sec. 4(a)"                                                                      
            Insert "sec. 35(a)"                                                                     
                                                                                                    
Page 4, line 2:                                                                                     
            Delete "sec. 1"                                                                         
            Insert "sec. 30"                                                                        
                                                                                                    
Page 4, line 3:                                                                                     
            Delete "sec. 3"                                                                         
            Insert "sec. 32"                                                                        
            Delete "sec. 4(b)"                                                                      
            Insert "sec. 35(b)"                                                                     
                                                                                                    
Page 4, line 5:                                                                                     
            Delete "sec. 2"                                                                         
            Insert "sec. 31"                                                                        
                                                                                                    
Page 4, following line 5:                                                                           
            Insert a new bill section to read:                                                      
              "* Sec. 39.  Except as provided in secs. 37 and 38                                 
            of this Act, this Act takes effect July 1, 2004. "                                      
                                                                                                    
Senator Bunde moved for the adoption of Amendment No. 1.                                            
Objections were heard.                                                                              
                                                                                                    
                                                                                                    

2004-05-11                     Senate Journal                      Page 3741
The question being: "Shall Amendment No. 1 be adopted?" The roll                                    
was taken with the following result:                                                                
                                                                                                    
HB 503                                                                                              
Second Reading                                                                                      
Amendment No. 1                                                                                     
                                                                                                    
YEAS:  15   NAYS:  5   EXCUSED:  0   ABSENT:  0                                                   
                                                                                                    
Yeas:  Bunde, Cowdery, Davis, Dyson, Ellis, Elton, French, Guess,                                   
Lincoln, Olson, Seekins, Stedman, Stevens B, Stevens G, Wilken                                      
                                                                                                    
Nays:  Green, Hoffman, Ogan, Therriault, Wagoner                                                    
                                                                                                    
and so, Amendment No. 1 was adopted.                                                                
                                                                                                    
HOUSE BILL NO. 503 am S (Title change authorized by SCR 32)                                         
was automatically in third reading.                                                                 
                                                                                                    
The question being: "Shall HOUSE BILL NO. 503 am S "An Act                                          
relating to taxes on cigarettes and tobacco products, to tax stamps on                              
cigarettes, to forfeiture of cigarettes and of property used in the                                 
manufacture, transportation, facilitation of transportation, possession,                            
offering for sale, or sale of unstamped cigarettes, to unfair cigarette                             
sales, and to licenses and licensees under the Cigarette Tax Act; the                               
tobacco product Master Settlement Agreement; and providing for an                                   
effective date" pass the Senate?" The roll was taken with the following                             
result:                                                                                             
                                                                                                    
HB 503 am S                                                                                         
Third Reading - Final Passage                                                                       
Effective Dates                                                                                     
                                                                                                    
YEAS:  15   NAYS:  5   EXCUSED:  0   ABSENT:  0                                                   
                                                                                                    
Yeas:  Bunde, Cowdery, Davis, Dyson, Ellis, Elton, French, Guess,                                   
Lincoln, Olson, Seekins, Stedman, Stevens B, Stevens G, Wilken                                      
                                                                                                    
Nays:  Green, Hoffman, Ogan, Therriault, Wagoner                                                    
                                                                                                    
and so, HOUSE BILL NO. 503 am S passed the Senate.                                                  
                                                                                                    
                                                                                                    

2004-05-11                     Senate Journal                      Page 3742
Senator Ben Stevens moved and asked unanimous consent that the                                      
vote on the passage of the bill be considered the vote on the effective                             
date clauses. Without objection, it was so ordered.                                                 
                                                                                                    
Engrossment was waived under Uniform Rule 43(b) and the bill was                                    
signed by the President and Secretary and returned to the House for                                 
consideration.