HB 1085: RELATING TO TAXATION.

A BILL FOR AN ACT

RELATING TO TAXATION.

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

     SECTION 1.  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, an excise tax equal to:

    [(1)  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)  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)  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)  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)  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)  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)  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)  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)  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)  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)] (1)  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;

     (2)       cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after January 1, 2026, whether or not sold at wholesale, or if not sold, then at the same rate upon the use by the wholesaler or dealer;

   [(12)] (3)  Seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, electronic smoking devices, and e-liquids, 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;

   [(13)] (4)  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; and

   [(14)] (5)  Seventy per cent of the wholesale price of each electronic smoking device or e-liquid sold, used, or possessed by a wholesaler or dealer on and after January 1, 2024, 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 2.  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;

     (5)  Section 245-3(a)(11), after June 30, 2013, and prior to July 1, 2015:

          (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)(11), after June 30, 2015, 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)  1.125 cents per cigarette, but not more than $7,400,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.]

each fiscal year:

     (1)  Beginning July 1, 2025,      per cent or $          , whichever is less, 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)  Beginning July 1, 2025,      per cent or $          , whichever is less, shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

     (3)  Beginning July 1, 2025,      per cent or $          , whichever is less, shall be deposited to the credit of the community health centers special fund established pursuant to section 321-1.65; and

     (4)  Beginning July 1, 2025,      per cent or $          , whichever is less, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.

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

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 3000.

Report Title:

Cigarette Tax; Tobacco Tax; Disposition of Revenues

Description:

Increases the tax rates for cigarettes and little cigars beginning 1/1/2026, amends the disposition of tax revenues to certain non-general funds starting from fiscal year 2026-2027, with the excess carrying over to the general fund, and expands the disposition of tax revenues to the non-general funds to include all tobacco product taxes.  Repeals obsolete historical tax rates.  Effective 7/1/3000.  (HD2)

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

A BILL FOR AN ACT

RELATING TO TAXATION.

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

     SECTION 1.  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, an excise tax equal to:

    [(1)  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)  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)  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)  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)  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)  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)  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)  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)  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)  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)] (1)  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;

     (2)  21.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after January 1, 2026, whether or not sold at wholesale, or if not sold, then at the same rate upon the use by the wholesaler or dealer;

   [(12)] (3)  Seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, electronic smoking devices, and e-liquids, 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;

   [(13)] (4)  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; and

   [(14)] (5)  Seventy per cent of the wholesale price of each electronic smoking device or e-liquid sold, used, or possessed by a wholesaler or dealer on and after January 1, 2024, 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 2.  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;

     (5)  Section 245-3(a)(11), after June 30, 2013, and prior to July 1, 2015:

          (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)(11), after June 30, 2015, 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)  1.125 cents per cigarette, but not more than $7,400,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.]

each fiscal year:

     (1)  Beginning July 1, 2025, twenty-five per cent or $14,080,000, whichever is less, 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)  Beginning July 1, 2025, twenty-five per cent or $7,400,000, whichever is less, shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

     (3)  Beginning July 1, 2025, twenty-five per cent or $8,800,000, whichever is less, shall be deposited to the credit of the community health centers special fund established pursuant to section 321-1.65; and

     (4)  Beginning July 1, 2025, twenty-five per cent or $8,800,000, whichever is less, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.

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

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 3000.

Report Title:

Cigarette Tax; Tobacco Tax; Disposition of Revenues

Description:

Increases the tax rates for cigarettes and little cigars beginning 1/1/2026, amends the disposition of tax revenues to certain non-general funds starting from fiscal year 2026-2027, with the excess carrying over to the general fund, and expands the disposition of tax revenues to the non-general funds to include all tobacco product taxes.  Repeals obsolete historical tax rates.  Effective 7/1/3000.  (HD1)

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

A BILL FOR AN ACT

RELATING TO TAXATION.

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

     SECTION 1.  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, an excise tax equal to:

    [(1)  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)  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)  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)  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)  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)  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)  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)  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)  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)  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)] (1)  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;

     (2)  21.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after January 1, 2026, whether or not sold at wholesale, or if not sold, then at the same rate upon the use by the wholesaler or dealer;

   [(12)] (3)  Seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, electronic smoking devices, and e-liquids, 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;

   [(13)] (4)  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; and

   [(14)] (5)  Seventy per cent of the wholesale price of each electronic smoking device or e-liquid sold, used, or possessed by a wholesaler or dealer on and after January 1, 2024, 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 2.  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:] each fiscal year:

    [(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;

     (5)  Section 245-3(a)(11), after June 30, 2013, and prior to July 1, 2015:

          (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)(11), after June 30, 2015, 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)  1.125 cents per cigarette, but not more than $7,400,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, 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, but not more than $8,800,000 in a fiscal year, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.]

     (1)  Beginning July 1, 2025, twenty-five per cent or $14,080,000, whichever is less, 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)  Beginning July 1, 2025, twenty-five per cent or $7,400,000, whichever is less, shall be deposited to the credit of the trauma system special fund established pursuant to section 321-22.5;

     (3)  Beginning July 1, 2025, twenty-five per cent or $8,800,000, whichever is less, shall be deposited to the credit of the community health centers special fund established pursuant to section 321-1.65; and

     (4)  Beginning July 1, 2025, twenty-five per cent or $8,800,000, whichever is less, shall be deposited to the credit of the emergency medical services special fund established pursuant to section 321-234.

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

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2025.

Report Title:

Cigarette Tax; Tobacco Tax; Disposition of Revenues

Description:

Increases the tax rates for cigarettes and little cigars beginning 1/1/2026, amends the disposition of tax revenues to certain non-general funds starting from fiscal year 2026-2027, with the excess carrying over to the general fund, and expands the tax disposition of tax revenues to the funds to include all tobacco product taxes.  Repeals obsolete historical tax rates.

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

STAND. COM. REP. NO.  471

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1085

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Higher Education, to which was referred H.B. No. 1085, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Increase the tax rates for cigarettes and little cigars, beginning January 1, 2026;

     (2)  Amend the disposition of tax revenues to certain special funds, beginning July 1, 2025; and

     (3)  Expand the disposition of tax revenues to the various special funds to include all revenues collected from all tobacco product taxes.

     Your Committee received testimony in support of this measure from the Department of the Attorney General; Department of Health; University of Hawaii Cancer Center; State Health Planning and Development Agency; Healthcare Association of Hawaii; Hawaii Substance Abuse Coalition; Hawaii Medical Association; Hawaiʻi Pacific Health; Hawaii COPD Coalition; The Queen's Health Systems; Coalition for a Tobacco-Free Hawaiʻi; American Cancer Society Cancer Action Network; Hawaiʻi Health & Harm Reduction Center; American Lung Association; and numerous individuals.  Your Committee received testimony in opposition to this measure from Japan Tobacco International U.S.A., Inc.; Hawaii Smokers Alliance; Cigar Association of America; Americans for Tax Reform; and three individuals.  Your Committee received comments on this measure from the Department of Taxation; Tax Foundation of Hawaii; and Tax Foundation.

     Your Committee finds that cigarette tax revenue has progressively declined since its inception, which has affected funding for many critical health care services and programs of the State, including funding for the University of Hawaii Cancer Center.  Your Committee further finds that increasing the tax on cigarettes and expanding the allocation of revenues to the special funds that support these important health care services and programs to include tax collected from all tobacco products will ensure that these services and programs are sufficiently funded.

     Your Committee has amended this measure by changing the tax rate for cigarettes and little cigars, as well as the disposition amounts of the tobacco product tax revenue, to unspecified amounts.

     Your Committee respectfully requests your Committee on Finance, should it deliberate on this measure, to consider:

     (1)  Establishing a tax rate of 21.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after January 1, 2026; and

     (2)  Beginning July 1, 2025, depositing the following amounts from the tobacco product tax revenue into the appropriate special funds:

          (A)  Twenty-five percent or $14,080,000, whichever is less, to be deposited to the credit of the Hawaii Cancer Research Special Fund;

          (B)  Twenty-five percent or $7,400,000, whichever is less, to be deposited to the credit of the Trauma System Special Fund;

          (C)  Twenty-five percent or $8,800,000, whichever is less, to be deposited to the credit of the Community Health Centers Special Fund; and

          (D)  Twenty-five percent or $8,800,000, whichever is less, to be deposited to the credit of the Emergency Medical Services Special Fund.

     As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1085, H.D. 1, as amended herein, and recommends that it be referred to your Committee on Finance in the form attached hereto as H.B. No. 1085, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Higher Education,

STAND. COM. REP. NO.  67

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1085

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Health, to which was referred H.B. No. 1085 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Increase the tax rates for cigarettes and little cigars, beginning January 1, 2026;

     (2)  Amend the disposition of tax revenues to certain non-general funds, beginning July 1, 2025; and

     (3)  Expand the disposition of tax revenues to the non-general funds to include all tobacco product taxes.  

     Your Committee received testimony in support of this measure from the Department of Health; Department of the Attorney General; University of Hawaiʻi Cancer Center; Hawaii Substance Abuse Coalition; Keiki Injury Prevention Coalition; Hina Mauka; Hawaiʻi Pacific Health; Hawaii COPD Coalition; Hawaiʻi Primary Care Association; American Cancer Society Cancer Action Network; Healthcare Association of Hawaii; Hawaiʻi Children's Action Network Speaks!; The Queen's Health Systems; Coalition for a Tobacco-Free Hawaiʻi; Hawaii Medical Association; and numerous individuals.  Your Committee received testimony in opposition to this measure from the Cigar Association of America; Americans for Tax Reform; Hawaii Smokers Alliance; and three individuals.  Your Committee received comments on this measure from the Department of Taxation; Tax Foundation of Hawaii; and Tax Foundation.

     Your Committee finds that according to the United States Surgeon General, increasing the price of tobacco products is the single most effective way to reduce consumption.  A ten percent increase in price is estimated to reduce overall cigarette consumption by up to five percent.  Your Committee additionally finds that since its inception, cigarette tax revenue has been used to support vital health care services in the State, including cancer research and prevention, the State Trauma System, community health centers, and emergency medical services.  However, in recent years cigarette tax revenue has declined, severely impacting the funding for these services.  Your Committee further finds that these services only receive cigarette tax revenues, but do not see revenues from taxes on products such as e-cigarettes, e-liquids, cigars, and other tobacco products.  This measure will increase the tax on cigarettes and expand the allocation of revenues to the special funds that support these important health care services to include all tobacco products, ensuring these services remain adequately funded.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1085, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1085, H.D. 1, and be referred to your Committee on Higher Education.

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