Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Health and Human Services, to which was referred S.B. No. 1236 entitled:

beg leave to report as follows:

The purpose of this measure is to discourage smoking, especially by young people, by increasing the tax on cigarettes.

A Hawaii County Council member, the American Lung Association, the American Heart Association, the American Cancer Society, the Hawaii Medical Service Association, the Coalition for a Tobacco Free Hawaii, the Tobacco Prevention and Control Advisory Board, and one individual submitted testimony in support of this measure. The Tax Foundation of Hawaii submitted comments.

Your Committees find 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 longer a person smokes, the greater the likelihood the person has of developing smoking-related health problems. According to the testimony of the American Cancer Society, leukemia and other cancers of the cervix, kidneys, pancreas, and stomach have been linked to smoking. Smoking is also associated with heart disease, stroke, emphysema, bronchitis, low birth weight babies, Sudden Infant Death Syndrome, increased frequency of colds and ear infections, and asthma. Research has demonstrated that smoking harms nearly every organ of the body, damaging overall health even if no specific disease develops.

Your Committees stress that this measure is made to deter addiction and not to generate revenue. It is expected that many current smokers will avoid the higher prices by quitting, cutting back, or switching to less expensive cigarettes. Those who stopped smoking in response to the cigarette tax increase would greatly improve their own health, which could also significantly reduce their health costs.

Your Committees have amended this measure by increasing the excise tax per cigarette 2 cents for the next three years, for a cumulative tax of 7 cents on September 30, 2005, 8 cents on June 30, 2006, and 8.5 cents on June 30, 2007. This amounts to a total tax of $1.40, $1.60, and $1.70, respectively, per pack of twenty cigarettes. This equals an additional increase of 40 cents per pack each year based on twenty cigarettes per pack.

Your Committees further amended this measure by earmarking twenty-five per cent of the tax imposed to be paid into the general fund, twenty-five per cent to be paid to the Department of Health for health promotion and disease prevention programs, and fifty per cent to be paid into the Hawaii Tobacco Prevention and Control Trust Fund.

As affirmed by the records of votes of the members of your Committees on Health and Human Services that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1236, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1236, S.D. 1, and be referred to the Committee on Ways and Means.