Iowa Information

Tobacco Taxes
Iowa's excise tax per pack of cigarettes: $0.360 Iowa's excise tax collection for the fiscal year ending June 2002: $89,795,000
Sales tax on tobacco products: 5.00%
Federal excise tax per pack of cigarettes: $0.39 Total federal excise tax collections in fiscal year 2002: $7,512,700,000
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Who Profits from Cigarette Sales? 
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Comparing Excise Taxes on Cigarettes, Beer and Wine

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Number of six-packs of beer that must be sold in Iowa to produce the same state excise tax revenue generated by one carton of cigarettes: 33.7 |

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Number of bottles of wine that must be sold in Iowa to produce the same state excise tax revenue generated by one carton of cigarettes: 10.4 |
Iowa Smokers' Contributions to the State Economy - 2004
In 2003, Iowa smokers comprised only 21.7% of the adult population in the state. Here is what they already pay because they choose to buy a legal product:
- Smokers Pay Excise Taxes $ 89,890,000
- Smokers Pay Sales Taxes $ 39,951,000
- Smokers Pay Tobacco Settlement Payments $ 63,436,000
$193,277,000
Smokers’ Economic/Tax Profile 2003
· Income
Ø Iowa smokers’ median household income $32,539
Ø Iowa nonsmokers’ median household income $41,974
· Working families pay more
Ø 35.7% of Iowa smokers had household incomes LESS THAN $25,000
Ø 9% of Iowa smokers had household incomes EQUAL TO or GREATER THAN $75,000
The impact of smoker payments on the incomes of working families was more than THREE TIMES the impact on higher income smokers. Those who can afford it least pay a disproportionate percentage of their hard-earned income in smoker payments.
· Smoker excise tax/sales tax/tobacco settlement payments liability in FY2004
Ø Total average paid per Iowa smoker in excise and sales taxes $271
Ø Cost per Iowa smoker for settlement payments to Iowa $133
Total annual payments to Iowa per smoker $404
Total annual payments to Iowa per nonsmoker $0
Iowa Smoker Facts
· Total smokers’ payments in Iowa in FY2004 were:
Ø Nearly fourteen times as large as state excise taxes on beer in FY 2004 ($14 million)
Ø More than three times as large as the liquor profits tax ($58 million)
Ø Five times as large as franchise tax revenues ($38 million).
Ø More than three times as large as racing and gaming revenues ($60 million).
· Iowa FY2004 smoker payments were large enough to support costs of FY2004 estimated general fund expenditures for:
Ø The Homestead Tax Credit Aid ($102.9 million) AND Agriculture and Natural Resources ($34.2 million) AND College Student Aid Commission ($51.5 million) COMBINED;
Ø Teacher Excellence Program ($55.5 million) AND the Dept. of Public Health ($23.9 million AND Iowa Veterans Home ($16.4 million) AND Child and Family Services ($97.1 million) COMBINED;
Ø Iowa State University general university costs ($173.2 million).
TOTAL SMOKER CIGARETTE PAYMENTS TO IOWA FY2004
Per year: $193,277,000
Per day: $ 529,164
Per hour: $ 22,048
Per minute: $ 367
Per second: $ 6 |
CIGARETTES DON’T PAY TAXES – IOWA SMOKERS DO!!
Iowa Smokers' Contributions to the State Economy - 2003
In 2002, Iowa smokers comprise only 23.1%1 of the adult population in the state. Here is what they already pay because they choose to buy a legal product:
Smokers Pay Excise Taxes2 |
$ |
89,890,000 |
Smokers Pay Sales Taxes2 |
$ |
39,951,000 |
Smokers Pay Tobacco Settlement Payments3 |
$ |
63,436,000 |
|
$ |
193,277,000 |
Smokers' Economic/Tax Profile 2002
Iowa smokers' median household income |
$ |
33,946 |
Iowa nonsmokers' median household income |
$ |
41,359 |
- Working Families Pay More1
30.9% of Iowa smokers had household income LESS than $25,000
9.2% of Iowa smokers had household income EQUAL to or GREATER THAN $75,000
The impact of smoker payments on the incomes of working families was more than THREE TIMES the impact on higher income smokers. Those who can afford it least pay a disproportionate percentage of their hard-earned income in smoker payments.
- Smoker excise tax/sales tax/tobacco settlement payments liability in 20024
Total average paid per Iowa smoker in excise and sales taxes |
$ |
256 |
Cost per Iowa smoker for settlement payments to Iowa |
$ |
125 |
Total annual payment to Iowa per smoker |
$ |
381 |
Total annual payments to Iowa per nonsmoker |
$ |
0 |
Iowa Smoker Facts 5
- Total smokers' FY2003 payments to Iowa of $193.3 million were:
- Nearly fourteen times as large as state excise taxes on beer in FY 2003 ($14 million), AND nearly four times as large as the liquor profits tax.
- Five and one-half times as large as franchise tax revenues ($35.3 million) in FY2003.
- Nearly as large as FY2003 corporate income tax revenues ($237 million).
- Smokers' payments in FY2003 were large enough to provide for estimated FY2003 general fund expenditures for:
- The Tuition Grant Program ($46.1 million); AND Teacher Excellence Program ($66.9 million); AND the Dept. of Public Health ($24.5 million); AND Iowa Veterans Home ($14.1 million); AND Mental Health Institutions ($40.8 million)
OR
- Iowa State University general university costs ($175.6 million);
OR
- Correctional institutions ($178.6 million).
- In 1997, smokers provided 5,834 jobs that paid an additional $8.64 million to the state in personal and corporate income taxes.6
TOTAL SMOKER CIGARETTE PAYMENTS TO IOWA |
|
Per year: |
$ |
193,277,000 |
Per day: |
$ |
529,164 |
Per hour: |
$ |
22,048 |
Per minute: |
$ |
367 |
Per second: |
$ |
6 |
|
CIGARETTES DON'T PAY TAXES - IOWA SMOKERS DO!!
1 Centers for Disease Control's Behavioral Risk Factor Surveillance System, 2001 2 Orzechowski & Walker, Arlington, Virginia; from state revenue department 3 PriceWaterhouseCooper 4 U.S. Census Bureau, 2000 state population and Centers for Disease Control's Behavioral Risk Surveillance System, 2001 5 Tax comparisons are from the Iowa Revenue Estimating Conference Monthly Reports, December 2003. Online at http://www.dom.state.ia.us/state/revenue/rec_monthly.html . Budget comparisons are from the Iowa Department of Management, Iowa Financial Summary, FY2004, 31 January 2003. It can be found online at: http://www.dom.state.ia.us/state/budget_proposals/files/FY04/FY04_Iowa_Budget_Report.pdf 6 American Economics Group, Inc., The U.S. Tobacco Industry in 1997: Its Economic Impact in the States.
$205,869,234 has been paid to Iowa since the Master Settlement Agreement was signed on November 23, 1998.
A summary of Iowa state law is provided below (for specific questions regarding state law, contact your legal advisor.)
Minimum Age |
Customers must be 18 years or older to purchase tobacco products.
|
Restricted Products |
Tobacco products, including cigarettes, cigars, snuff, chewing tobacco or pipe tobacco. |
Acceptable Forms of Identification |
Driver's license or non-operator's identification card. |
Fine/Penalty Schedule for Selling to Minors |
If a person (retailer, clerk, employee or any other individual or entity) sells, gives or otherwise supplies tobacco or tobacco products to any person under the age of eighteen, they will be subject to state penalties and fines. For a first violation, the retailer shall be assessed a civil penalty in the amount of $300. Failure to pay the civil penalty shall result in automatic suspension of the permit for a period of fourteen days. For a second violation within a period of two years, the retailer shall be assessed a civil penalty in the amount of $1,500 or the retailer's permit shall be suspended for a period of thirty days (retailer may select either penalty). For a third violation within a period of three years, the retailer shall be assessed a civil penalty in the amount of $1,500 and the retailer's permit shall be suspended for a period of thirty days. For a fourth violation within a period of three years, the retailer shall be assessed a civil penalty in the amount of $1,500 and the retailer's permit shall be suspended for a period of sixty days. For a fifth violation within a period of four years, the retailer's permit shall be revoked.
If the violation is committed by an employee, the retailer shall not be assessed a penalty and the violation shall be deemed not to be a violation for the purpose of determining the number of violations for which a penalty may be assessed if 1) the employee holds a valid certificate of completion from the Alcoholic Beverages Division tobacco compliance employee training program (discussed below) at the time of the violation OR 2) the retailer provides written documentation that the employee of the retailer has completed an in-house tobacco compliance employee training program or a tobacco compliance employee training program which is substantially similar to the I Pledge program which is approximately one hour in length as developed by the Alcoholic Beverages Division of the Department of Commerce (*Note: the second option is repealed April 2004). A retailer may assert this bar against assessment of a penalty only once in a four-year period for a violation that takes place at the same place of business location.
If the seller has a reasonable belief based on factual evidence that an identification card offered by a prospective purchaser of tobacco products is altered or falsified or belongs to another person, the retailer or employee may retain the identification card and deliver it to the appropriate city or county law enforcement agency within 24 hours. The retailer shall file a written report of the circumstances under which the card was retained. Upon taking possession of an identification card, a receipt for the card with the date and hour of seizure noted shall be provided to the person from whom the card is seized.
The Alcoholic Beverages Division of the Department of Commerce shall develop a tobacco compliance employee training program not to exceed two hours in length for employees and prospective employees of tobacco retailers to inform the employees about state and federal laws and regulations regarding the sale of cigarettes and tobacco products to persons under eighteen years of age and compliance with and the importance of laws regarding the sale of cigarettes and tobacco products to persons under eighteen years of age.
The tobacco compliance employee training program shall be made available to employees and prospective employees of tobacco retailers at no cost to the employee, the prospective employee, or the retailer, and in a manner which is as convenient and accessible to the extent practicable throughout the state so as to encourage attendance. Contingent upon the availability of specified funds for provision of the program, the division shall schedule the program on at least a monthly basis and the program shall be available at a location in at least a majority of counties.
Upon completion of the tobacco compliance employee training program, an employee or prospective employee shall receive a certificate of completion, which shall be valid for a period of two years, unless the employee or prospective employee is convicted of selling tobacco products to minors, in which case the certificate shall be void.
The tobacco compliance employee training program shall also offer periodic continuing employee training and re-certification for employees who have completed initial training and received certificates of completion. |
Affirmative Defense |
None. |
Minor Possession |
The use, possession, purchase, or attempted purchase of tobacco products by minors is prohibited, though minors may possess tobacco products in the course of employment. Violators will be assessed a civil penalty of $50 and 8 hours of community service (unless waived by the court) for the first offense; $100 and 12 hours of community service for the second offense; and $250 and 16 hours of community service for the third or subsequent offense.
A person under the age of eighteen who alters or displays or has in his possession a fake or altered driver's license or identification card and uses it to purchase or attempt to purchase tobacco products commits a simple misdemeanor punishable by a fine of $100. |
Sign Requirement
 |
None. |
Compliance Checks |
As a condition of receiving federal substance abuse block grant funds, federal law requires the State of Iowa to conduct random, unannounced inspections of tobacco outlets to determine compliance rates. The Iowa Department of Public Health coordinates the inspections. |
DISCLAIMER: This information summary is provided as a service of the Coalition, but is not intended to provide legal advice or analysis. These summaries are not intended to be complete representations of state law, which may contain additional rules and restrictions relating to tobacco products not mentioned in this summary, as well as retailing prohibitions related to matters including, but not limited to, state required training, minimum pack size, the sale of loose cigarettes and other restrictions. Retailers should not rely on these summaries as complete or accurate descriptions of applicable federal, state or local law. Users with questions about the law should seek the advice of counsel. Each state law is unique and possibly represents multiple legislative or regulatory acts. Local laws may differ. Check with local authorities for variations from state law. These summaries are not intended to be complete representations of state law. |
The reprinting of this information from the Coalition, does not constitute a representation or admission by RJRT that such information is accurate, complete, or a proper characterization of the laws concerned. The Coalition for Responsible Tobacco Retailing is a cooperative effort among retailers, wholesalers and manufacturers who share a common goal: to do all they can to prevent tobacco sales to minors.
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Mason City. Smoker's gathering at Meetup Days.
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Iowa Supreme Court rules against ordinance Smoke 'em if you got 'em -- Ames' partial smoking ban is dead. The Iowa Supreme Court ruled against the Ames ordinance in a challenge to the state's first partial smoking ban. The eight businesses that won the suit against the ordinance are: Whiskey River, 132 Main St. People's Bar and Grille, 2428 Lincoln Way Wallaby's, 3720 Lincoln Way Cyclone Truck Stop, 1811 S. Dayton Ave. Dublin Bay, 320 S. 16th St. Café Beaudelaire, 2504 Lincoln Way Tradewinds Café, 115 S. Fifth St. Café Lovish, 2512 Lincoln Way
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