Report Title:

Cigarette and Tobacco Tax

Description:

Raises the excise tax on tobacco products from 6.00 cents per cigarette to 8.00 cents per cigarette after June 30, 2003, 9.00 cents per cigarette after June 30, 2004, and 10.00 cents per cigarette after June 30, 2005. Raises the excise tax on other tobacco products from forty to fifty per cent. Establishes the Substance Abuse and Tobacco Cessation Special Fund. (HB549 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

549

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE CIGARETTE AND TOBACCO TAX.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that smoking and tobacco use is the leading preventable cause of morbidity and mortality in Hawaii and the United States. Smoking-related diseases claim an estimated four hundred thirty thousand seven hundred American lives each year, including those affected indirectly, such as babies born prematurely due to prenatal maternal smoking and victims of secondhand exposure to tobacco's carcinogens. Each year in Hawaii, over one thousand one hundred deaths, or sixteen per cent of all resident deaths, are tobacco-related.

Smoking costs the United States approximately $97,200,000,000 each year in health care costs and lost productivity. In Hawaii, health care costs and lost productivity are estimated at $400,000,000 annually. Smoking is directly responsible for eighty-seven per cent of lung cancer cases and causes most cases of emphysema and chronic bronchitis.

Smoking is also a major factor in coronary heart disease and stroke. It may be causally related to malignancies in other parts of the body and has been linked to a variety of other conditions and disorders, including slowed healing of wounds, infertility, and peptic ulcer disease.

One in three children will suffer serious health effects from exposure to secondhand smoke. Smoking during pregnancy accounts for an estimated twenty to thirty per cent of low-birth weight babies, up to fourteen per cent of pre-term deliveries, and ten per cent of all infant deaths. Even apparently healthy, full-term babies of smokers have been found to be born with narrowed airways and curtailed lung function. In 1999, almost thirteen per cent of women who gave birth smoked during pregnancy.

Smoking by parents is also associated with a wide range of adverse effects on their children, including exacerbation of asthma, increased frequency of colds and ear infections, and sudden infant death syndrome. An estimated one hundred fifty thousand to three hundred thousand cases of lower respiratory tract infections in children less than eighteen months of age, resulting in seven thousand five hundred to fifteen thousand annual hospitalizations, are caused by secondhand smoke.

Secondhand smoke involuntarily inhaled by nonsmokers is classified by the United States Environmental Protection Agency as a known human (Group A) carcinogen, responsible for approximately three thousand lung cancer deaths annually in American nonsmokers.

Approximately twenty-two million three hundred thousand American women are smokers. Current female smokers aged thirty-five years or older are twelve times more likely to die prematurely from lung cancer than nonsmoking females. More American women die annually from lung cancer than any other type of cancer. For example, lung cancer has caused an estimated sixty-seven thousand six hundred female deaths in 2000, compared with forty thousand eight hundred estimated female deaths caused by breast cancer.

The purpose of this Act is to discourage smoking and the use of tobacco products by:

(1) Increasing the excise tax on cigarettes;

(2) Increasing the excise tax on the wholesale price of tobacco products; and

(3) Creating a special fund to provide substance abuse and tobacco cessation prevention and rehabilitation programs.

SECTION 2. Chapter 245, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§245- Substance abuse and tobacco cessation special fund. (a) There is established in the state treasury a special fund to be known as the substance abuse and tobacco cessation special fund. One cent of the excise tax collected for each cigarette sold, used, or possessed by a wholesaler or dealer pursuant to section 245-3(a) shall be deposited into the special fund.

(b) Moneys in the special fund shall be used to provide substance abuse and tobacco cessation prevention and rehabilitation education programs."

SECTION 3. Section 245-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every wholesaler or dealer, in addition to any other taxes provided by law, shall pay for the privilege of conducting business and other activities in the State:

(1) An excise tax equal to [5.00] 5 cents for each cigarette sold, used, or, possessed by a wholesaler or dealer after June 30, 1998, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(2) An excise tax equal to [6.00] 6 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after September 30, 2002, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(3) An excise tax equal to [6.50] 8 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 2003, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(4) An excise tax equal to [7.00] 9 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 2004, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; [and]

(5) An excise tax equal to 10 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 2005, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; and

[(5)](6) An excise tax equal to [forty] fifty per cent of the wholesale price of each article or item of tobacco products sold by the wholesaler or dealer, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer.

Where the tax imposed has been paid on cigarettes or tobacco products that thereafter become the subject of a casualty loss deduction allowable under chapter 235, the tax paid shall be refunded or credited to the account of the wholesaler or dealer. The tax shall be applied to cigarettes through the use of stamps."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2003; provided that section 2 shall take effect on July 1, 2004.