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Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20130&cosponId=12620
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House of Representatives
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted: April 25, 2013 04:53 PM
From: Representative Tim Hennessey
To: All House members
Subject: Increasing the presumptive minimum markup for cigarette sales
 
I invite your co-sponsorship for a bill which would increase the price of cigarettes, either by the pack or by the carton.

State Law currently sets the minimum price which each level of dealer (stamper – wholesaler – retailer) must charge, expressed as a percentage markup. Under this bill, a stamping agent’s markup would increase from 1.7% to 2.5%; a wholesaler’s from 4% to 4.5% and a retailer’s from 6% to 8%.

While the costs for each level dealer have risen dramatically, the required markups for retailers and wholesalers have remained static for more than 50 years.

The bill would prohibit any dealers from using cigarettes as “loss leaders”, making certain they can’t use cigarettes as sale items to attract persons to stores in the hope of selling other items at higher prices. It would require that electronic or internet records be kept of each contract for sale, to make it easier for the Dept. of Revenue to audit records and assure the proper collection of sales taxes.

This bill would update a law which has served the Commonwealth well:
  • by discouraging illegal sales (of black or gray market cigarettes).
  • by enhancing the collection of sales taxes.
  • by benefitting dealers properly licensed by the state.
This bill makes a good system better. The slightly higher price will discourage sales (a health benefit). Retail licensees will see increased revenues, and wholesalers and stamping agents will make more profit and be paid quicker.

This bill deals only with cigarettes – it does not deal with any other tobacco product.

This proposal has the support of the PA Convenience Store Council, the PA Food Merchants and the PA Distributors Assn.



Introduced as HB1456