CONFERENCE COMMITTEE REPORT NO. 49

                            Honolulu, Hawaii
                                            , 1999

                            RE:   S.B. No. 788
                                  S.D. 2
                                  H.D. 2
                                  C.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Conference on the disagreeing vote of the
Senate to the amendments proposed by the House of Representatives
in S.B. No. 788, S.D. 2, H.D. 2, entitled:  

     "A BILL FOR AN ACT RELATING TO TAXATION," 

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

     The purpose of this measure is to establish a system of
mandatory cigarette stamps as a means to assess, collect, and
enforce cigarette taxes.

     Your Committee on Conference is in accord that this measure
is necessitated by the terms of the federal court-approved
settlement of the recent tobacco litigation case.  States are
required to establish a cigarette stamp system to collect
cigarette taxes, in order to share in the settlement proceeds.

     Your Committee on Conference finds that Act 10, Session Laws
of Hawaii 1999, relating to exempting United States government

 
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agencies and instrumentalities, is not in conflict with this
measure.  This measure is not intended to impose a cigarette
stamp requirement on cigarettes sold to the United States.  

     Upon further consideration, your Committee on Conference has
amended this measure by:

     (1)  Changing references to dates, as follows:

          (A)  From April 15, 2000, to December 15, 1999, for the
               licensee to apply for stamps;

          (B)  From May 1, 2000, to January 1, 2000, for the
               licensee to affix a stamp to each package of
               cigarettes;

          (C)  From September 1, 2000, to April 1, 2000, for
               prohibiting cigarettes to be sold or to be placed
               or stored in vending machines without a stamp;

          (D)  From September 1, 2000, to April 1, 2000, for
               penalties to begin; and

          (E)  From September 1, 2000, to April 1, 2000, to
               require the destruction of unstamped cigarettes;

     (2)  Imposing the obligation to pay the tax upon the
          wholesaler or dealer and the licensee; 

     (3)  Deleting reference in current law to applying the tax
          against the latest of the activities of selling, using,
          or possessing;

     (4)  Deleting references to percentages of the taxes
          collected to be allocated to county liquor commissions;

     (5)  Deleting reference to the Auditor making a study and
          inserting reference to the Director of Taxation to
          study the effectiveness of the Act; 

     (6)  Making appropriations for each county liquor commission
          to enforce the cigarette stamp tax requirements; and

     (7)  Requiring each county liquor commission to report to
          the legislature before the 2001 and 2002 Sessions on
          their respective activities relating to this measure,
          including expenses, fines and penalties collected, and
          forfeitures.


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     Your Committee on Conference is in accord with the intent
and purpose of S.B. No. 788, S.D. 2, H.D. 2, as amended herein,
and recommends that it pass Final Reading in the form attached
hereto as S.B. No. 788, S.D. 2, H.D. 2, C.D. 1.

                                   Respectfully submitted,

MANAGERS ON THE PART OF THE        MANAGERS ON THE PART OF THE
            HOUSE                             SENATE
                                   
                                   
                                   
______________________________     ______________________________
ALEXANDER C. SANTIAGO, Co-Chair    SUZANNE CHUN OAKLAND, Co-Chair
                                   
                                   
                                   
______________________________     ______________________________
NATHAN SUZUKI, Co-Chair            CAROL FUKUNAGA, Co-Chair
                                   
                                   
                                   
______________________________     ______________________________
KENNY GOODENOW, Member             ANDREW LEVIN, Co-Chair
                                   
                                   
                                   
______________________________     ______________________________
MICHAEL P. KAHIKINA, Member        JONATHAN CHUN, Member
                                   
                                   
                                   
______________________________     ______________________________
BERTHA F.K. LEONG, Member          CAL KAWAMOTO, Member
                                   
                                   
                                   
                                   ______________________________
                                   WHITNEY ANDERSON, Member

 
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