STAND. COM. REP. NO. 544

Honolulu, Hawaii

RE: S.B. No. 887

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 887 entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to increase the cigarette and tobacco tax and allocate portions of the resulting revenue to the Hawaii Health Systems Corporation and toward repaying medical school loans of qualifying graduates of the John A. Burns School of Medicine.

Your Committee received testimony in support of this measure from the Hawaii Health Systems Corporation, East Hawaii Region of Hawaii Health Systems Corporation, American Heart Association, Ho‘omanapono Political Action Committee, Hawai‘i Public Health Institute, American Cancer Society Cancer Action Network, Blue Zones Project, and five individuals. Your Committee received testimony in opposition to this measure from the University of Hawai‘i System; Hawaii Smokers Alliance; Retail Merchants of Hawaii; JT International U.S.A., Inc.; Black Lava Vape; and over forty individuals. Your Committee received comments on this measure from the Department of Taxation, Department of Health, and Tax Foundation of Hawaii.

Your Committee finds that tobacco use remains the leading cause of preventable disease and death in the United States and in Hawaii. Smoking is associated with cancer, heart disease, stroke, emphysema, asthma and much more, yet tobacco use can be easily prevented by increasing its cost. It has been estimated that a ten percent increase in the price of cigarettes reduces adult smoking by about two percent, reduces smoking in young adults by approximately three and a half percent, and reduces the number of children who smoke by six or seven percent. Raising the cigarette and tobacco tax on cigarettes and little cigars sold in the State will protect individuals of all ages, especially adolescents and children, from tobacco dependency and the illnesses and premature death associated with smoking. At the same time, the revenues raised by this measure will help finance the public health system, which so many smokers ultimately rely on.

Your Committee has amended this measure by:

(1) Increasing the allocation of tax collections to the Hawaii cancer research special fund from 2 cents to 3 cents;

(2) Clarifying that the increased tax rate and disposition of the resulting revenues proposed by this measure will go into effect on July 1, 2020; and

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

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. 887, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 887, S.D. 1, 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,

________________________________

ROSALYN H. BAKER, Chair