STAND. COM. REP. NO. 2326

Honolulu, Hawaii

RE:    S.B. No. 2496

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committees on Health and Commerce and Consumer Protection, to which was referred S.B. No. 2496 entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO PRODUCTS,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Impose an excise tax equal to eight-five percent of the wholesale price of any tobacco product, other than large cigars, sold by a wholesaler or dealer on and after January 1, 2015, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

     (2)  Require any increase in the excise tax rate imposed on cigarettes or little cigars on or after January 1, 2015, to trigger an automatic excise tax increase on other tobacco products on or after January 1, 2015; and

     (3)  Require the additional monies collected under the excise tax to be deposited to the credit of the Hawaii cancer research special fund.

     Your Committees received testimony in support of this measure from the Department of Health, Hawaii Primary Care Association, University of Hawaii System, American Lung Association, American Cancer Society, Coalition for a Tobacco-Free Hawaii, and several individuals.  Your Committees received testimony in opposition to this measure from the Hawaii Smokers Alliance and one individual.  Your Committees received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committees find that the tax on other tobacco products is currently lower than the tax on cigarettes, even though they are similarly addictive and dangerous, and are concerned that consumers may be more likely to purchase tobacco products as the price of cigarettes increases without a comparable increase in the price of tobacco products.  Your Committees further find that other tobacco products present significant health risks leading to cancer, heart disease, respiratory illnesses, and other serious diseases.

     Your Committees have amended this measure by:

     (1)  Inserting an effective date of January 1, 2050, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Health and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2496, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2496, 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 Commerce and Consumer Protection,

____________________________ ROSALYN H. BAKER, Chair

____________________________ JOSH GREEN, Chair