Report Title:

Tobacco Products; General Excise Tax; Cancer Screening Special Fund; Healthy Start Special Fund

 

Description:

Increases the general excise tax on tobacco products other than cigarettes; designates a percentage of this increase to cervical and breast cancer screening and the Healthy Start program. (HB1527 HD1)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1527

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO TOBACCO.

 

 

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

 


SECTION 1. The direct relationship between tobacco use and cancer has been publicly known for over fifty years. In addition, many studies show that as the cost of cigarettes rises, use decreases. As use decreases, costs due to cigarette-related diseases decrease as well.

In Hawaii, while the general excise tax on cigarettes has been raised over the past fifteen years, the general excise tax on other tobacco products (OTPs) hasn't been raised since 1965 when all tobacco products, including cigarettes, were taxed at twenty per cent. In 1993, the tax on cigarettes was differentiated from the overall forty per cent tax on tobacco products and taxed at three cents per cigarette. Since then, the cigarette tax has been raised to its current ten cents per cigarette with further raises due over the next three years. By September 30, 2011, the tax will equal 13 cents per cigarette after which no further increases are mandated. Therefore, while the tax per cigarette has increased from twenty per cent in 1965 (less than .5 cents per cigarette) to 13 cents per cigarette (by 2011), the tax on OTPs has not changed in forty-three years.

In 2007, revenues from the general excise tax on OTPs equaled $2.97 million. By doubling this tax to eighty per cent, the state could realize an additional $2.97 million in revenue, tripling could provide an additional $5.66 million, and quadrupling, $8.49 million in revenue.

Furthermore, because of the direct link between tobacco and cancer, it is reasonable that a portion of any tax increase in tobacco products be used for cancer screening and prevention and to improve the lives of Hawaii's residents.

The purpose of this Act is to raise the tax on OTPs. In addition, a percentage of these additional revenues will be designated for use in cervical and breast cancer screening and the department of health's healthy start program.

SECTION 2. Chapter 321, part III, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"321- Cervical and breast cancer screening special fund. (a) There is established within the state treasury to be administered by the department, the cervical and breast cancer screening special fund, into which shall be deposited all moneys received pursuant to section 245-15-(7).

All interest on special fund balances shall accrue to the special fund.

(b) Moneys in the cervical and breast cancer screening special fund shall be used to pay for the costs of cervical and breast cancer screening."

SECTION 3. Chapter 321, part XXV, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"321- Healthy start special fund. (a) There is established within the state treasury to be administered by the department, the healthy start special fund, into which shall be deposited all moneys received pursuant to section 245-15(7).

(b) Moneys in the healthy start special fund shall be used to expand the healthy start program."

SECTION 4. 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:] state:

(1) An excise tax equal to 5.00 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 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 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 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;

(5) An excise tax equal to 8.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 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;

(6) An excise tax equal to 9.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2007, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(7) An excise tax equal to 10.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2008, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(8) An excise tax equal to 11.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2009, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(9) An excise tax equal to 12.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2010, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

(10) An excise tax equal to 13.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2011, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; and

(11) 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 5. Section 245-15, Hawaii Revised Statutes, is amended to read as follows:

"245-15 Disposition of revenues. All moneys collected pursuant to this chapter shall be paid into the state treasury as state realizations to be kept and accounted for as provided by law; provided that, of the moneys collected under the tax imposed pursuant to:

(1) Section 245-3(a)(5), after September 30, 2006, and prior to October 1, 2007, 1.0 cent per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(2) Section 245-3(a)(6), after September 30, 2007, and prior to October 1, 2008:

(A) 1.5 cents per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(B) 0.25 cents per cigarette shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5; and

(C) 0.25 cents per cigarette shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234;

(3) Section 245-3(a)(7), after September 30, 2008, and prior to October 1, 2009:

(A) 2.0 cents per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(B) 0.5 cents per cigarette shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

(C) 0.25 cents per cigarette shall be deposited to the credit of the community health centers special fund; and

(D) 0.25 cents per cigarette shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234;

(4) Section 245-3(a)(8), after September 30, 2009, and prior to October 1, 2010:

(A) 2.0 cents per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(B) 0.75 cents per cigarette shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

(C) 0.75 cents per cigarette shall be deposited to the credit of the community health centers special fund; and

(D) 0.5 cents per cigarette shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234;

(5) Section 245-3(a)(9), after September 30, 2010, and prior to October 1, 2011:

(A) 2.0 cents per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(B) 1.0 cent per cigarette shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

(C) 1.0 cent per cigarette shall be deposited to the credit of the community health centers special fund; and

(D) 1.0 cent per cigarette shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234; [and]

(6) Section 245-3(a)(10), after September 30, 2011, and thereafter:

(A) 2.0 cents per cigarette shall be deposited to the credit of the Hawaii cancer research special fund, established pursuant to section 304A-2168, for research and operating expenses and for capital expenditures;

(B) 1.5 cents per cigarette shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

(C) 1.25 cents per cigarette shall be deposited to the credit of the community health centers special fund; [and]

(D) 1.25 cents per cigarette shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234[.];

and

(7) Section 245-3(a)(11):

(A) per cent of the revenues shall be deposited into the healthy start special fund established pursuant to section 321- ; and

(B) per cent of the revenues shall be deposited into the special fund for cervical and breast cancer screening established pursuant to section 321- .

The department shall provide an annual accounting of these dispositions to the legislature."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on January 1, 2050, and shall apply to taxable years beginning after December 31, 2009.