Report Title:

Tobacco Tax; Increase

Description:

Increases excise tax on cigarettes to $0.09, $0.11, and $0.13 per cigarette sold, used, or possessed by a wholesaler or dealer after 9/30/2005, 6/30/2006, and 6/30/2007, respectively, (amounting to $1.80, $2.20, and $2.60 per pack of 20 cigarettes).

HOUSE OF REPRESENTATIVES

H.B. NO.

350

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to cigarette tax.

 

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

SECTION 1. The legislature finds that smoking is the largest cause of morbidity and mortality in the nation that can be easily prevented. Beyond harming individual health, use of tobacco in the United States costs about $7.18 for each pack of cigarettes sold in terms of health care expenses and decreased worker productivity. In Hawaii, this amounts to $526,000,000 in health care expenses and productivity losses.

Smoking is also associated with heart disease, cancer, stroke, emphysema, bronchitis, low birth-weight babies, sudden infant death syndrome, increased frequency of colds and ear infections, and asthma in the household. Asthma is the largest single cause of school absenteeism in the State.

The legislature further finds that increasing the tax on cigarettes is the most effective way to prevent young people from becoming daily smokers. It has been estimated that a ten per cent increase in the price of cigarettes decreases the number of youngsters who start smoking by three to seven per cent in the long-term. The estimated decrease for adults is three per cent. Hawaii was once amongst the nation's leaders in cigarette taxes. However, as of January 2005, the State ranks only tenth in the nation in imposing $1.40 in tax per pack of cigarettes ($0.07 per cigarette in a twenty-cigarette pack). Rhode Island ranks first with $2.46 per pack, New Jersey ranks second with $2.40 per pack, Michigan ranks third at $2.00, Montana is fourth with $1.70, and Alaska is fifth at $1.60 per pack. Tobacco taxes can be viewed as a user tax affecting the 17.3 per cent of Hawaii adults who are smokers who do not pay the full societal costs of their use of tobacco.

The purpose of this Act is to discourage smoking, especially by young people, by increasing the tax on cigarettes.

SECTION 2. 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] 9.00 cents for each cigarette sold, used, or, possessed by a wholesaler or dealer after [June 30, 1998,] September 20, 2005, 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] 11.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after [September 30, 2002,] June 30, 2006, 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] 13.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, [2003,] 2007, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; and

(4) [An excise tax equal to 7.00 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 forty 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 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon approval.

INTRODUCED BY:

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