STAND. COM. REP. NO. 2

Honolulu, Hawaii

RE:    S.B. No. 139

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committees on Health and Economic Development and Taxation, to which was referred S.B. No. 139 entitled:

"A BILL FOR AN ACT RELATING TO CIGARETTE TAX,"

beg leave to report as follows:

     The purpose of this measure is to clarify that the cigarette tax collected pursuant to section 245-15, Hawaii Revised Statutes, shall be assessed on a per cigarette basis and to ensure that the cigarette taxes collected are earmarked for each special fund through the year 2011 and beyond.

     Testimony in support of this measure was submitted by the Department of Taxation, the Department Of Health, the City and County of Honolulu Emergency Services Department, the Cancer Research Center of Hawaii, the American Cancer Society, the Coalition for a Tobacco-Free Hawaii, Hawaii Pacific Health, Hawaii Primary Care Association, The Queen's Medical Center, and the American Heart Association.  Testimony discussing this measure was submitted by the Tax Foundation of Hawaii.

     Your Committees find that clarification of Act 316, Session Laws of Hawaii 2006, is necessary to ensure that the cigarette tax is assessed on a per cigarette basis as the Legislature intended.  Your Committees further find that, since the cigarette tax was implemented in September 2006, the Department of Taxation has collected the tax on a per cigarette basis.

     It is the intent of your Committees to encourage the reduction of tobacco consumption by continuing the collection of cigarette tax revenues and ensuring that these revenues are properly administered and dispersed as the Legislature intended.

     Your Committees amended this measure, in accordance with the recommendations submitted by the Department of Taxation, by amending the effective date of subsequent increases in the cigarette tax to begin after September 30, instead of September 29 of each respective year.

     As affirmed by the records of votes of the members of your Committees on Health and Economic Development and Taxation that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 139, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 139, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Health and Economic Development and Taxation,

____________________________ CAROL FUKUNAGA, Chair

____________________________ DAVID Y. IGE, Chair