STAND. COM. REP. NO. 2130

Honolulu, Hawaii

RE:    S.B. No. 2692

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2692 entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Impose an excise tax equal to eighty percent of the wholesale price of any tobacco product, other than large cigars, sold by a wholesaler or dealer on and after January 1, 2017, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; and

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

     Your Committee received testimony in support of this measure from the Department of Health, University of Hawaii Cancer Center, Coalition for a Tobacco-Free Hawaii, American Cancer Society Cancer Action Network, American Lung Association in Hawaii, Weinman Foundation, and thirty-five individuals.  Your Committee received testimony in opposition to this measure from the Hawaii Smokers Alliance and eighteen individuals.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that Hawaii has a substantial interest in reducing the number of individuals of all ages who use tobacco products.  Tobacco use in Hawaii causes approximately 1,400 deaths per year among adults and poses a heavy burden on Hawaii's health care system.  Research has shown that either a tax on cigarettes or cigarette price increases have the propensity to reduce the rate of smoking by adult and youth smokers.  However, as the price of cigarettes increases, smokers may turn to less expensive tobacco products, including loose or roll-your-own tobacco.

     Your Committee further finds that there should not be a lower-priced tobacco alternative to cigarettes in the State.  Higher tobacco product prices will encourage tobacco users to quit or sustain cessation, prevent youth initiation, and reduce consumption among those who continue to use tobacco.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2692 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

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ROSALYN H. BAKER, Chair