Increases tax per cigarette to 9 cents after 1/1/2007, 11 cents after 1/1/2008, and 13 cents after 1/1/2009. Earmarks 50% of tax to Cancer Research Center, 25% to DOH health promotion and disease prevention programs, and 25% to the Hawaii tobacco prevention and control trust fund.

A BILL FOR AN ACT

SECTION 1. The legislature finds that smoking is the largest cause of morbidity and mortality in the nation that can be easily prevented. Beyond harming individual health, use of tobacco in the United States costs about $7.18 for each pack of cigarettes sold in terms of health care expenses and decreased worker productivity. In Hawaii, this amounts to $526,000,000 in health care expenses and productivity losses.

Smoking is also associated with cancer, heart disease, stroke, emphysema, bronchitis, low birth-weight babies, sudden infant death syndrome, increased frequency of colds and ear infections, and asthma in the household. Asthma is the largest single cause of school absenteeism in the State.

The legislature further finds that increasing the tax on cigarettes is the most effective way to prevent young people from becoming daily smokers. It has been estimated that a ten per cent increase in the price of cigarettes decreases the number of youngsters who start smoking by three to seven per cent in the long-term. The estimated decrease for adults is three per cent. Hawaii was once amongst the nation's leaders in cigarette taxes. However, as of January 2005, the State ranks only tenth in the nation in imposing $1.40 in tax per pack of cigarettes (7.00 cents per cigarette in a twenty-cigarette pack). Rhode Island ranks first with $2.46 per pack, New Jersey ranks second with $2.40 per pack, Michigan ranks third at $2.00, Montana is fourth with $1.70, and Alaska is fifth at $1.60 per pack. Tobacco taxes can be viewed as a user tax affecting the 17.3 per cent of Hawaii adults who are smokers and who do not pay the full societal costs of their use of tobacco.

The legislature further finds that allocating a significant percentage of tobacco tax revenues to the Cancer Research Center of Hawaii is the most appropriate and effective use of such revenues. The Cancer Research Center is a National Cancer Institute-designated Cancer Center. This mark of excellence is given to cancer centers which conduct a combination of basic, population sciences, and clinical research, but are not required to offer patient care. The Cancer Research Center is one of several NCI-designated Cancer Centers that does not offer patient care. As a result, Hawaii residents must travel to the mainland for access to clinical trials of drugs and other cutting-edge cancer treatments. Such travel will become an increasing burden for state residents because the number of cancer cases in Hawaii is expected to double by 2030.

Dedicating fifty per cent of the tobacco tax revenues to the research and operating expenses of the Cancer Research Center of Hawaii will enable it to be considered for classification as a NCI-designated Comprehensive Cancer Center. This classification requires the Cancer Research Center to dedicate its efforts to the eradication of cancer through a comprehensive and multi-disciplinary program of cancer research, treatment, patient care, prevention, education, and community outreach. The competition for this classification is highly competitive due to the health advantages and economic advantages it brings. A Comprehensive Cancer Center could serve as the engine for biotechnology development in the State, as cancer research and treatment attracts the most biotechnology investment dollars. The expanded Center would also be a spur to increased health tourism.

The dedication of funds would also enable the Center to expand to the neighbor islands and allow all Hawaii residents to receive state-of-the-art cancer treatment at home.

The purpose of this Act is to discourage smoking, especially by young people, by increasing the tax on cigarettes and to allocate funds to effective sources in the prevention and treatment of cancer caused by smoking.

SECTION 2. Section 245-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every wholesaler or dealer, in addition to any other taxes provided by law, shall pay for the privilege of conducting business and other activities in the State:

Where the tax imposed has been paid on cigarettes or tobacco products that thereafter become the subject of a casualty loss deduction allowable under chapter 235, the tax paid shall be refunded or credited to the account of the wholesaler or dealer. The tax shall be applied to cigarettes through the use of stamps."

SECTION 3. Section 245-15, Hawaii Revised Statutes, is amended to read as follows:

"§245-15 Disposition of revenues. All moneys collected pursuant to this chapter shall be paid into the state treasury as state realizations to be kept and accounted for as provided by law[.]; provided that, of the moneys collected under the tax imposed pursuant to section 245-3(a) that represent the difference between the 7 cents for each cigarette sold, used, or possessed by a wholesaler or dealer under paragraph (1) of that section and the amounts of tax imposed and collected on each cigarette sold, used, or possessed by a wholesaler or dealer under paragraphs (2), (3), and (4) of that section:

SECTION 4. Section 328L-4, Hawaii Revised Statutes, is amended to read as follows:

"[[]§328L-4[]] Use of funds appropriated to the department. The department, immediately upon receipt of the thirty-five per cent of moneys appropriated pursuant to section 328L-2(b)(2) shall:

For purposes of paragraph (2), the director shall convene an advisory group that shall be separate from the tobacco prevention and control advisory board, to strategically plan the development and implementation of preventive systems to achieve measurable outcomes and to make recommendations for the expenditure of these moneys. The advisory group shall be composed of nine members with expertise in the programs under paragraph (2), and shall be selected at the discretion of the director."

SECTION 5. Section 328L-5, Hawaii Revised Statutes, is amended by amending subsections (d) and (e) to read as follows:

"(d) The Hawaii tobacco prevention and control trust fund may receive appropriations, contributions, grants, endowments, cigarette tax revenues pursuant to section 245-15, or gifts in cash or otherwise from any source, including the State, corporations or other businesses, foundations, government, individuals, and other interested parties; provided that any appropriations made by the State shall not supplant or diminish the funding of existing tobacco prevention and control programs or any health related programs funded in whole or in part by the State.

(e) The assets of the Hawaii tobacco prevention and control trust fund shall consist of:

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.