STAND. COM. REP. NO.  663-16


Honolulu, Hawaii

                , 2016


RE:   H.B. No. 1634





Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii




     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 1634 entitled:




begs leave to report as follows:


     The purpose of this measure is to amend the excise tax rate on the sale of large cigars.


     Specifically, this measure amends the tax rate on sales of large cigars that occur on or after July 1, 2016, to the lesser of 50 cents for each large cigar or fifty percent of the wholesale price of each large cigar.


     ABC Stores; Cigar Association of America, Inc.; Havana Club Honolulu; Hawaii Cigar Association; Hawaii Food Industry Association; Hawaii Smokers Alliance; Kauai Cigar Company; Mokuleia Cigar Company; and seventy-five individuals submitted testimony is support of the measure.


     The Department of Health; American Cancer Society Cancer Action Network; American Heart Association; Coalition for a Tobacco-Free Hawaii; and forty-four individuals submitted testimony in opposition of the measure.


     The Department of Taxation; Tax Foundation of Hawaii; and forty individuals submitted comments on the measure.


     Your Committee has great reservations about moving this measure forward due to public health concerns.  Further, although the measure's proponents testified that it would benefit the local cigar industry, your Committee finds that the proposed excise tax cap would apply equally to local and foreign producers.  Despite these reservations, your Committee also finds that this measure could have a positive impact on the budget, including as a possible source of funding for cancer research.  Should the Committee on Finance decide to hear this measure, your Committee respectfully requests that the Committee on Finance carefully scrutinize the measure with regard to its financial impact.


     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1634 and recommends that it pass Second Reading and be referred to your Committee on Finance.



Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,