STAND. COM. REP. NO. 864

Honolulu, Hawaii

RE: S.B. No. 887

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 887, S.D. 1, 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 amend statutory provisions relating to taxes on tobacco products.

Specifically, this measure increases the:

(1) Tax on each cigarette or little cigar that is sold, used, or possessed by a wholesaler or dealer;

(2) Amount from the foregoing tax on each cigarette or little cigar that is deposited to the credit of the:

(A) Hawaii cancer research special fund; and

(B) Community health centers special fund.

Your Committee received written comments in support of this measure from the Hawaii Health Systems Corporation, East Hawaii Region of Hawaii Health Systems Corporation, Oahu County Committee on Legislative Priorities of the Democratic Party of Hawaii, American Cancer Society Cancer Action Network, American Heart Association, Hawaii Public Health Institute, and Blue Zones Project.

Your Committee received written comments in opposition to this measure from Irie Hawaii Stores; Hi Lyfe Vaporz, LLC; Retail Merchants of Hawaii; and twenty-five individuals.

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

Your Committee finds that tobacco use is linked to cancer, heart disease, stroke, emphysema, asthma, and other diseases, and is still the leading cause of preventable disease and death in the State and in the nation. Your Committee believes that raising the tax on cigarettes and little cigars sold in the State will reduce the sale of these products and ultimately help protect residents from tobacco dependency, illnesses, and premature death. Further, revenues generated by this measure will help provide money for health-related funds.

Your Committee has amended this measure by changing the effective date of the:

(1) Provisions that increase the tax on cigarettes and little cigars and reallocate cigarette and tobacco tax revenues to July 1, 2051; and

(2) Remaining provisions of the measure to July 1, 2050,

to facilitate further discussion on the measure.

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. 887, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 887, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair