Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 788
                                     S.D. 2
                                     H.D. 2

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Finance, to which was referred S.B. No.
788, S.D. 2, H.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to ensure that state cigarettes
excise taxes are paid by:

     (1)  Requiring that each package of cigarettes sold in the
          State be identified with a stamp signifying that the
          cigarette tax has been paid;

     (2)  Including civil and criminal penalties and forfeitures
          of cigarettes to be enforced by the Attorney General
          and the respective county police departments, liquor
          commissions, and prosecuting attorneys; and

     (3)  Repealing the law on June 30, 2005, upon a finding by
          the Legislative Auditor that the law has not reduced
          the loss of cigarette tax revenue due to the State from
          the illegal sale of untaxed cigarettes.

     The Department of Health and the American Lung Association
of Hawaii testified in support of this measure.  The Legislative
Information Services of Hawaii, Inc., testified in support of the
intent of this measure.  The Department of Taxation, the Tax

                                 STAND. COM. REP. NO. 1832
                                 Page 2

Foundation of Hawaii, and an individual commented on this
     Your Committee has amended this bill by:

     (1)  Specifying a state stamp fee of .2 percent to pay for
          the State's cost of providing the stamps;

     (2)  Stipulating that beginning September 1, 2000, all
          unstamped cigarettes be destroyed or returned to the
          manufacturers, or the persons in possession or control
          of the cigarettes will be subject to criminal penalties
          and administrative fines; and

     (3)  Making technical, nonsubstantive amendments for

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
788, S.D. 2, H.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as S.B. No. 788,
S.D. 2, H.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,

                                   DWIGHT Y. TAKAMINE, Chair