HOUSE OF REPRESENTATIVES

H.B. NO.

657

TWENTY-SEVENTH LEGISLATURE, 2013

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

Relating to tobacco products.

 

 

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

 


     SECTION 1.  The legislature finds that tobacco use is the single most preventable cause of disease, disability, and death in the United States.  Tobacco use continues to be a problem in Hawaii, causing approximately 1,100 deaths per year among adults.  An estimated 27,400 children in Hawaii currently under the age of eighteen will ultimately die prematurely from smoking.  Tobacco use poses a heavy burden on Hawaii's health care system and economy.  Each year, smoking costs approximately $336,000,000 in health care expenditures and $320,000,000 in lost productivity in the State.

     The legislature further finds that tobacco products are addictive and inherently dangerous, causing many different types of cancer, heart disease, and other serious illnesses.  Hawaii has a substantial interest in reducing the number of individuals of all ages who use tobacco products, and a particular interest in protecting adolescents from tobacco dependence and the illnesses and premature death associated with tobacco use.

     The legislature additionally finds that taxes on tobacco products should be similar to the tax rates already imposed on cigarettes.  Tobacco products other than cigarettes are currently taxed at a lower rate than cigarettes, even though their use carries similar health risks.  Research has shown that either a tax on cigarettes or cigarette price increases have the propensity to reduce the rate of smoking by adult and youth smokers.  However, the legislature is concerned that as the price of cigarettes increases, smokers may be tempted to purchase less expensive tobacco products, including loose or roll-your-own tobacco.

     The legislature concludes that there should not be a lower-priced tobacco alternative to cigarettes in Hawaii; therefore a similar tax rate for cigarettes and tobacco products that acts as a deterrent for all forms of tobacco use is needed.  Higher tobacco product prices will encourage tobacco users to quit, sustain cessation, prevent youth initiation, and reduce consumption among those who continue to use tobacco.

     It is the legislature's intent for loose and roll-your-own tobacco to be considered a tobacco product subject to the excise tax under this Act.

     The purpose of this Act is to:

     (1)  Impose an excise tax equal to $3.20 per net ounce of tobacco for each article or item of tobacco products, other than large cigars, sold by the wholesaler or dealer on and after January 1, 2014; and

     (2)  Require the additional moneys collected under the excise tax to be deposited to the credit of the Hawaii cancer research special fund.

     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 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 13.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after July 1, 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 11.00 cents for each little cigar sold, used, or possessed by a wholesaler or dealer on and after October 1, 2009, 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 15.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after July 1, 2010, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

    (11)  An excise tax equal to 16.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after July 1, 2011, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;

    (12)  An excise tax equal to seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, sold by the 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; [and]

    (13)  An excise tax equal to $3.20 per net ounce of tobacco, as provided in good faith by the manufacturer, of each article or item of tobacco products, other than large cigars, sold by the wholesaler or dealer on and after January 1, 2014, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer; and

   [(13)] (14)  An excise tax equal to fifty per cent of the wholesale price of each large cigar of any length, 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.

Where the tax imposed has been paid on cigarettes, little cigars, 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.  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 July 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 established pursuant to section 321‑1.65; 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 June 30, 2009, and prior to July 1, 2013:

         (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 established pursuant to section 321‑1.65; 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; [and]

     (5)  Section 245-3(a)(11), after June 30, 2013, 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 established pursuant to section 321‑1.65; 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

     (6)  Section 245-3(a)(13), on or after January 1, 2014, and thereafter, $3.20 per net ounce of tobacco of each article or item of tobacco products, other than large cigars, 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.

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

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2013.

 

INTRODUCED BY:

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Report Title:

Tobacco Products; Excise Tax; Hawaii Cancer Research Special Fund

 

Description:

Imposes an excise tax equal to $3.20 per net ounce of tobacco for each article or item of tobacco products, other than large cigars, sold by the wholesaler or dealer on and after January 1, 2014.  Requires the additional moneys collected under the excise tax to be deposited to the credit of the Hawaii cancer research special fund.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.