THE SENATE
TWENTY-SEVENTH LEGISLATURE,
2013
STATE OF HAWAII

S.B. NO. 188 S.D. 2

A BILL FOR AN ACT

RELATING TO TAXATION. 

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

SECTION 1.  The legislature finds that local premium cigar sellers whose products are made for adult consumers, including cigars produced with Hawaii-grown tobacco, are put at a competitive disadvantage by imposition of a percentage tax.  Lower priced cigars can be purchased legally through mail order sales, but few, if any, consumers file usage taxes for mail order cigars.  As a result, the State loses tax revenues from reduced local sales and unpaid usage taxes from mail order sales.

The purpose of this Act is to help the State of Hawaii collect more tax revenue from in-state cigar sales by replacing the percentage tax with a flat tax that will help make the local premium cigar industry competitive with mail order cigar businesses.

SECTION 2.  Section 245-1, Hawaii Revised Statutes, is amended as follows:

1.  By adding a new definition to be appropriately inserted and to read:

     ""Premium cigar" means a cigar that is made entirely by hand of all natural tobacco leaf, hand-constructed and hand-wrapped, with no filter or artificial flavors, wholesaling for $2 or more per cigar, and weighing more than four pounds per one thousand cigars."

2.  By amending the definition of "tobacco products" to read:

     ""Tobacco products" means tobacco in any form, other than cigarettes or little cigars, that is prepared or intended for consumption or for personal use by humans, including [large] premium cigars and any substitutes thereof other than cigarettes that bear the semblance thereof, snuff, chewing or smokeless tobacco, and smoking or pipe tobacco."

3.  By deleting the definition of "large cigar".

     [""Large cigar" means any roll for smoking made wholly or in part of tobacco if such product is wrapped in any substance containing tobacco and weighs more than four pounds per thousand."]

SECTION 3.  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] premium cigars, sold by the wholesaler or dealer on and after [September 30, 2009,] 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)  An excise tax equal to [fifty per cent of the wholesale price of] 50.00 cents for each [large] premium cigar of any length[,] and sold, used, or possessed by a wholesaler or dealer on and after [September 30, 2009,] 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.

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 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, 2050.

Report Title:

Cigars; Tax

Description:

Repeals the definition of large cigar and adds a new definition of premium cigar.  Changes the tax rate on sales of premium cigars.  Effective 7/1/2050. (SD2)

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