STAND. COM. REP. NO. 760

Honolulu, Hawaii

RE:    S.B. No. 528

       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 Ways and Means, to which was referred S.B. No. 528, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO,"

begs leave to report as follows:

     The purpose of this measure is to make permanent the requirement that businesses engaged in the sale of cigarettes and other tobacco products at the retail level acquire a retail tobacco permit from the Department of Taxation to do so.

     Your Committee received six written comments.  Copies of written comments submitted to the Committee are available for review on the Legislature’s website.

     This measure deletes the language in Act 131, Session Laws of Hawaii 2005, that would repeal the requirement for an entity engaged in the retail sale of cigarettes or other tobacco products to obtain a retail tobacco permit, effective July 1, 2009, thus making the requirement permanent.  Your Committee finds that retail tobacco permits facilitate the enforcement of the cigarette tax and tobacco tax law by providing a known and measurable list of entities engaged in the retail sale of cigarettes and other tobacco products.  More than 1,500 entities in Hawaii, all engaged in the retail sale of cigarettes and other tobacco products, have applied for and received a retail tobacco permit.

     Your Committee also finds that, in testimony submitted to the Legislature in 2009, the Department of Taxation projected that reduced enforcement efforts in the monitoring of tobacco retailers could result in a revenue loss of approximately $5,300,000 per year.  Your Committee believes that permanently establishing the requirement to obtain a retail tobacco permit will allow the Department to maintain an effective level of tax revenue collection.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 528, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DONNA MERCADO KIM, Chair