Increases tax per cigarette to fund the John A. Burns school of medicine, emergency medical services, trauma care, and community health centers. (SB2961 HD1)

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. 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 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 programs that strive to maintain Hawaii's health such as the John A. Burns school of medicine, Hawaii's emergency medical services, our critically needed trauma centers, and the community health centers are the most appropriate and effective use of such revenues to help the greatest number of people in our island-state.

The purpose of this bill 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 disease and injury.

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 7.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer under section 245-3(a)(1) and the amounts of tax imposed and collected on each cigarette sold, used, or possessed by a wholesaler or dealer under section 245-3(a)(2), (3), and (4):

SECTION 4. Section 321-234, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Fees remitted pursuant to section 249-31, cigarette tax revenues designated under section 245-15, interest and investment earnings attributable to the moneys in the special fund, legislative appropriations, and grants, donations, and contributions from private or public sources for the purposes of the fund, shall be deposited into the special fund."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2006; provided that section 3, paragraph 3 shall take effect only if a bill establishing the trauma care fund, in any form, passed by the legislature in the regular session of 2006 becomes an Act; provided further that if the trauma care fund is not established, the amounts designated to be paid into the trauma care fund shall be paid into the general fund.