Title: Tobacco Tax Equity Act of 2017
Policy area: Taxation

Summary:
Tobacco Tax Equity Act of 2017
This bill amends the Internal Revenue Code, with respect to the excise tax on tobacco products, to tax pipe tobacco, smokeless tobacco products, and large cigars at the same level as cigarettes.
The bill revises the definition of "tobacco products," for purposes of such tax, to include any other product determined to be a tobacco product by the Food and Drug Administration. The bill also specifies that such products must be taxed at a level equivalent to the rate for cigarettes on an estimated per use basis.
The bill also makes smokeless tobacco products sold in discrete single-use units subject to an excise tax of $50.33 per thousand.
The tax rates for tobacco products must be adjusted for inflation after 2017.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1837 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1837

 To amend the Internal Revenue Code of 1986 to provide tax rate parity 
          among all tobacco products, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 19, 2017

   Mr. Durbin (for himself, Mr. Brown, Mr. Reed, Mr. Blumenthal, Mr. 
Markey, and Mr. Franken) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax rate parity 
          among all tobacco products, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tobacco Tax Equity Act of 2017''.

SEC. 2. ESTABLISHING EXCISE TAX EQUITY AMONG ALL TOBACCO PRODUCT TAX 
              RATES.

    (a) Tax Parity for Pipe Tobacco and Roll-Your-Own Tobacco.--Section 
5701(f) of the Internal Revenue Code of 1986 is amended by striking 
``$2.8311 cents'' and inserting ``$24.78''.
    (b) Tax Parity for Smokeless Tobacco.--
            (1) Section 5701(e) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in paragraph (1), by striking ``$1.51'' and 
                inserting ``$13.42'';
                    (B) in paragraph (2), by striking ``50.33 cents'' 
                and inserting ``$5.37''; and
                    (C) by adding at the end the following:
            ``(3) Smokeless tobacco sold in discrete single-use 
        units.--On discrete single-use units, $50.33 per thousand.''.
            (2) Section 5702(m) of such Code is amended--
                    (A) in paragraph (1), by striking ``or chewing 
                tobacco'' and inserting ``, chewing tobacco, or 
                discrete single-use unit'';
                    (B) in paragraphs (2) and (3), by inserting ``that 
                is not a discrete single-use unit'' before the period 
                in each such paragraph; and
                    (C) by adding at the end the following:
            ``(4) Discrete single-use unit.--The term `discrete single-
        use unit' means any product containing tobacco that--
                    ``(A) is not intended to be smoked; and
                    ``(B) is in the form of a lozenge, tablet, pill, 
                pouch, dissolvable strip, or other discrete single-use 
                or single-dose unit.''.
    (c) Tax Parity for Large Cigars.--
            (1) In general.--Paragraph (2) of section 5701(a) of the 
        Internal Revenue Code of 1986 is amended by striking ``52.75 
        percent'' and all that follows through the period and inserting 
        the following: ``$24.78 per pound and a proportionate tax at 
        the like rate on all fractional parts of a pound but not less 
        than 5.033 cents per cigar.''.
            (2) Guidance.--The Secretary of the Treasury, or the 
        Secretary's delegate, may issue guidance regarding the 
        appropriate method for determining the weight of large cigars 
        for purposes of calculating the applicable tax under section 
        5701(a)(2) of the Internal Revenue Code of 1986.
    (d) Tax Parity for Roll-Your-Own Tobacco and Certain Processed 
Tobacco.--Subsection (o) of section 5702 of the Internal Revenue Code 
of 1986 is amended by inserting ``, and includes processed tobacco that 
is removed for delivery or delivered to a person other than a person 
with a permit provided under section 5713, but does not include 
removals of processed tobacco for exportation'' after ``wrappers 
thereof''.
    (e) Clarifying Tax Rate for Other Tobacco Products.--
            (1) In general.--Section 5701 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(i) Other Tobacco Products.--Any product not otherwise described 
under this section that has been determined to be a tobacco product by 
the Food and Drug Administration through its authorities under the 
Family Smoking Prevention and Tobacco Control Act shall be taxed at a 
level of tax equivalent to the tax rate for cigarettes on an estimated 
per use basis as determined by the Secretary.''.
            (2) Establishing per use basis.--For purposes of section 
        5701(i) of the Internal Revenue Code of 1986, not later than 12 
        months after the later of the date of the enactment of this Act 
        or the date that a product has been determined to be a tobacco 
        product by the Food and Drug Administration, the Secretary of 
        the Treasury (or the Secretary of the Treasury's delegate) 
        shall issue final regulations establishing the level of tax for 
        such product that is equivalent to the tax rate for cigarettes 
        on an estimated per use basis.
    (f) Clarifying Definition of Tobacco Products.--
            (1) In general.--Subsection (c) of section 5702 of the 
        Internal Revenue Code of 1986 is amended to read as follows:
    ``(c) Tobacco Products.--The term `tobacco products' means--
            ``(1) cigars, cigarettes, smokeless tobacco, pipe tobacco, 
        and roll-your-own tobacco, and
            ``(2) any other product subject to tax pursuant to section 
        5701(i).''.
            (2) Conforming amendments.--Subsection (d) of section 5702 
        of such Code is amended by striking ``cigars, cigarettes, 
        smokeless tobacco, pipe tobacco, or roll-your-own tobacco'' 
        each place it appears and inserting ``tobacco products''.
    (g) Tax Rates Adjusted for Inflation.--Section 5701 of such Code, 
as amended by subsection (e), is amended by adding at the end the 
following new subsection:
    ``(j) Inflation Adjustment.--
            ``(1) In general.--In the case of any calendar year 
        beginning after 2017, the dollar amounts provided under this 
        chapter shall each be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2016' for `calendar year 
                1992' in subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $0.01, such amount shall be rounded to 
        the next highest multiple of $0.01.''.
    (h) Effective Dates.--
            (1) In general.--Except as provided in paragraphs (2) 
        through (4), the amendments made by this section shall apply to 
        articles removed (as defined in section 5702(j) of the Internal 
        Revenue Code of 1986) after the last day of the month which 
        includes the date of the enactment of this Act.
            (2) Discrete single-use units and processed tobacco.--The 
        amendments made by subsections (b)(1)(C), (b)(2), and (d) shall 
        apply to articles removed (as defined in section 5702(j) of the 
        Internal Revenue Code of 1986) after the date that is 6 months 
        after the date of the enactment of this Act.
            (3) Large cigars.--The amendments made by subsection (c) 
        shall apply to articles removed after December 31, 2017.
            (4) Other tobacco products.--The amendments made by 
        subsection (e)(1) shall apply to products removed after the 
        last day of the month which includes the date that the 
        Secretary of the Treasury (or the Secretary of the Treasury's 
        delegate) issues final regulations establishing the level of 
        tax for such product.
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