STAND. COM. REP. NO.944

Honolulu, Hawaii

, 2001

RE: S.B. No. 992

S.D. 2

H.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred S.B. No. 992, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO,"

beg leave to report as follows:

The purpose of this bill is to allow better administration and enforcement of the cigarette tax stamp law by:

(1) Creating a presumption that all cigarettes are subject to the stamp tax;

(2) Removing the exemption for the resale of cigarettes purchased at military outlets, and providing for the application of existing sales and vending penalties and fines under the tax stamp law;

(3) Remedying an oversight in the law by establishing and exempting from central service and departmental administrative expenses transfers, two special funds to receive monies currently designated for the law's enforcement and implementation:

(A) The Cigarette Tax Stamp Administrative Special Fund (CTSA Special Fund), to be administered by the Department of Taxation (DOTAX) to provide stamps and administer the law; and

(B) The Cigarette Tax Stamp Enforcement Special Fund (CTSE Special Fund), to be administered by the Department of the Attorney General (AG) to enforce the law;

and

(4) Making start-up $1 appropriations from the general fund to the CTSA and CTSE Special Funds, and appropriations of $1 for fiscal years 2001-2002 and 2002-2003, out of both Special Funds for tax stamp administration and enforcement.

Testimony in support of this measure was received from the AG and DOTAX. The Tax Foundation and Hawaiian Isle Enterprises, Inc., commented.

Upon further consideration, your Committees have amended this bill to allow cigarette distribution businesses to recover costs incurred in affixing stamps to cigarette packages. The amendments added by your Committees to section 245-26, Hawaii Revised Statutes, for this purpose:

(1) Authorize the cost of stamps to be reduced by an unspecified percentage of the denominated value of each stamp purchased, to allow cigarette distributor cost recovery; and

(2) Provide that the percent reduction for cost recovery is not available to a cigarette distributor that is in noncompliance with State law.

Your Committees have also reorganized the bill for clarity, by dividing it into two parts:

(1) Part I contains the bill's armed services outlet cigarette resales provisions; and

(2) Part II contains special fund and cost recovery provisions.

Other technical, nonsubstantive amendments have also been made for purposes of clarity, consistency, and style.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 992, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 992, S.D. 2, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs,

____________________________

ERIC G. HAMAKAWA, Chair

____________________________

KENNETH T. HIRAKI, Chair