STAND. COM. REP. NO. 1036

Honolulu, Hawaii

RE:    H.B. No. 1175

       H.D. 3

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Health, to which was referred H.B. No. 1175, H.D. 3, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to generate general fund revenues by increasing the cigarette tax from 10 cents to 20 cents per cigarette, beginning July 1, 2009.

     Your Committee received testimony in support of this measure from the Hawaii Primary Care Association, the American Heart Association, the American Lung Association and the Coalition for a Tobacco-Free Hawaii.  Testimony in support of this measure with amendments was submitted by the American Cancer Society.  Testimony in opposition to this measure was submitted by the Department of Taxation.  Comments on this measure were submitted by the Tax Foundation of Hawaii.

     Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that this measure is a one-time tax increase that replaces the current yearly tax increase which puts the per-cigarette tax at 13 cents by September 30, 2011.

     Your Committee further finds that a portion of the revenues collected from the cigarette tax should be used for tobacco prevention programs.

     Accordingly, your Committee has amended this measure by:

     (1)  Inserting language that provides for a percentage of the remaining amount of tax collected pursuant to section 245-3(a)(8), Hawaii Revised Statutes, to be deposited to the credit of the Hawaii tobacco prevention and control trust fund established pursuant to section 328L-5, Hawaii Revised Statutes; and

     (2)  Changing the effective date to July 1, 2009.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1175, H.D. 3, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1175, H.D. 3, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

DAVID Y. IGE, Chair