Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Tourism and Intergovernmental Affairs, to which was referred S.B. No. 602 entitled:

begs leave to report as follows:

The purpose of this measure is to amend the definition of "cooler beverage" to mean any liquor containing less than seven per cent alcohol by volume.

Your Committee received testimony in support of this measure from Distilled Spirits Council of the United States. The Department of Health, Department of Taxation, and the Wine Institute submitted testimony in opposition. The Tax Foundation of Hawaii submitted comments.

Your Committee finds that current law defines "cooler beverage" as either a wine or malt beverage cooler in which wine or beer is blended with juices or other ingredients, but excludes spirit coolers, which are a blend of less than seven per cent alcohol and juices or other ingredients. Spirit coolers are taxed at a rate of $5.98 per wine gallon, while wine and malt coolers are taxed at eighty-five cents per wine gallon.

Your Committee finds that this measure would make the sale of spirit-based coolers economically feasible, and is expected to generate an additional $200,000 to $300,000 annually in liquor tax revenue, as a result of increased sales.

As affirmed by the record of votes of the members of your Committee on Tourism and Intergovernmental Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 602 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.