STAND. COM. REP. NO. 271

Honolulu, Hawaii

RE:    S.B. No. 871

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 871 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to limit the tax imposed on wholesalers and dealers for each large cigar to the lesser of:

     (1)  Fifty cents; or

     (2)  Fifty per cent of the wholesale price of the cigar.

     Your Committee received testimony in support of this measure from Cigar Association of America, Inc.; Cigar Rights of America, Hawaii; Havana Club Honolulu; Hawaii Cigar Association; Kauai Cigar Company; Mokuleia Cigar Company; and twenty-one individuals.

     Your Committee received testimony in opposition to this measure from the Department of Health; American Cancer Society Cancer Action Network; Hawaii COPD Coalition; Hawaii Public Health Institute; and one hundred three individuals.

     Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that the excise tax rate imposed on the sale of large cigars makes it difficult for local producers of cigars to compete with mail-order suppliers that sell cigars in Hawaii without paying state taxes and whose customers do not file their tax liability under the State's use tax law.  Your Committee further finds that this measure addresses this issue by setting a cap on the excise tax imposed on the sale of large cigars, thereby limiting the financial burden caused by the tax.

     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. 871 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.

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

________________________________

JILL N. TOKUDA, Chair