Cigarette tax hike advances

A key state Senate committee advanced a bill Thursday to increase the state’s cigarette tax despite objections from smokers who say that extra tax burden will weigh most heavily on low-income residents.

The Hawaii Smokers Alliance also argued that the state’s continuing effort to squeeze more money out of smokers by raising the tax is creating a booming black market for illicit, untaxed cigarettes in Hawaii.

The original version of Senate Bill 2690 would increase the tax to 20 cents per cigarette from 16 cents, or an increase of 25 percent. That would boost the state tax on a package of 20 cigarettes from $3.20 today to $4 when the bill takes effect.

A spokeswoman for the state Department of Taxation said the proposed tax increase would generate an extra $14.3 million a year for the state.

Half of the additional money would be earmarked for the Hawaii Cancer Center, and half of the extra tax collections would go to the state Department of Health’s Chronic Disease Prevention and Health Promotion Division to fund smoking cessation and education programs.

The most recent increase in the cigarette tax was in 2011, and the state now collects almost $130 million a year in cigarette and tobacco taxes.

The bill is supported by the Health Department, the American Heart Association, the American Cancer Society Cancer Action Network and the Hawaii Public Health Institute.

The Health Department testified that the U.S. Centers for Disease Control and Prevention recommends increasing the price of tobacco products as the “single most effective way to prevent initiation among nonsmokers and to reduce consumption.”

Kim Nguyen, Hawaii executive director of the American Lung Association of the Mountain Pacific, said in written testimony that tobacco use costs the state $526 million annually in health care and other costs, and that a tax increase will encourage smokers to quit.

The Hawaii Smokers Alliance objected to the bill, calling the cigarette tax “highly regressive” and warning lawmakers that the measure is “targeting lower-income voters the hardest right before an election.”

Michael Zehner, co-chairman of the Hawaii Smokers Alliance, said in written testimony that lawmakers are proposing to increase the levy on an already overtaxed product, and predicted that raising the tax will reduce tax collections because people will buy fewer smokes.

Senate Ways and Means Chairwoman Jill Tokuda amended the bill to remove the specific amount of the tax increase from the language in the document, a step often taken by lawmakers when they are still mulling exactly how to proceed with a measure.

Tokuda (D, Kailua-Kaneohe) said she realizes increasing any tax is difficult for senators, and that removing the specific amount of the tax increase from the bill is a way to keep the measure moving while allowing for flexibility to make changes later.

The committee then voted to approve the amended bill, which now goes to the full Senate for further consideration. Sens. Sam Slom (R, Diamond Head-Ka- hala-Hawaii Kai) and Lorraine Inouye (D, Kapulehu-Waimea- North Hilo) voted against the tax increase.