STAND. COM. REP. NO. 1090

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 176
                                     H.D. 2




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

Sir:

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

     "A BILL FOR AN ACT RELATING TO TOBACCO TAX,"

begs leave to report as follows:

     The purpose of this bill is to ensure that state cigarette
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 to be enforced
          by the police departments, liquor commissions,
          prosecuting attorneys, and the Attorney General; and

     (3)  Repealing the law in 2005 upon a finding by the
          Legislative Auditor that the law has not reduced the
          loss of tax revenue due to the illegal sale of untaxed
          cigarettes.

     The Department of Health and the American Lung Association
of Hawaii testified in support of this measure.  The Department
of Taxation and the Hawaii Food Industry Association supported
the intent of this bill.  The Tax Foundation of Hawaii and an
individual commented on this bill.


 
 
 
                                 STAND. COM. REP. NO. 1090
                                 Page 2

 
     Your Committee has made technical, nonsubstantive amendments
to the bill for the purpose of clarity and to correct drafting
errors.

     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 H.B. No.
176, H.D. 1, as amended herein, and recommends that it pass Third
Reading in the form attached hereto as H.B. No. 176, H.D. 2.

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



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair