Hawaii 2024 Regular Session

Hawaii Senate Bill SB3288 Compare Versions

Only one version of the bill is available at this time.

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1	1	THE SENATE S.B. NO. 3288 THIRTY-SECOND LEGISLATURE, 2024 STATE OF HAWAII A BILL FOR AN ACT relating to taxation. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	THE SENATE S.B. NO. 3288
4	4	THIRTY-SECOND LEGISLATURE, 2024
5	5	STATE OF HAWAII
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7	7	THE SENATE
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9	9	S.B. NO.
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11	11	3288
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13	13	THIRTY-SECOND LEGISLATURE, 2024
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17	17	STATE OF HAWAII
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31	31	A BILL FOR AN ACT
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37	37	relating to taxation.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47	47	SECTION 1. The legislature finds that the definition of "premium cigar", once proposed by the United States Food and Drug Administration, as discussed in Cigar Ass'n of Am. v. U.S. Food & Drug Admin., 480 F.Supp.3d 256 (D.D.C. 2020), and used in Cigar Ass'n of Am. v. U.S. Food & Drug Admin., No. 16-cv-01460 (APM), (D.D.C. Aug. 9, 2023), distinguishes premium cigars from other tobacco products. The legislature further finds that local premium cigar sellers whose products are made for adult consumers, including cigars produced with Hawaii-grown tobacco, are unfairly burdened by being subject to a non-differentiated state percentage tax that is generally passed on to customers. As a result, cigar retailers are put at a competitive disadvantage as lower priced premium cigars can be purchased from the mainland United States or through the black market at a significantly lower cost. The legislature finds that it is necessary to ease the unfair burden on the local premium cigar industry that has been at a competitive disadvantage due to the percentage tax, which can also help the State collect more tax revenue as in-state premium cigar sales should increase when prices become more competitive with the other states. Accordingly, the purpose of this Act is to: (1) Establish a definition for "premium cigar" that is distinct from a "large cigar"; (2) Exclude premium cigars from percentage excise tax; and (3) Establish an excise tax on premium cigars at a rate of 50 cents per premium cigar. SECTION 2. Section 245-1, Hawaii Revised Statutes, is amended as follows: 1. By adding two new definitions to be appropriately inserted and to read: ""Characterizing flavor" means a distinguishable taste or aroma of candy, chocolate, vanilla, fruit, berry, nut, herb, spice, honey, or an alcoholic drink that is imparted to tobacco or tobacco smoke either before or during consumption. Tobacco products are deemed to have a "characterizing flavor" if the product is advertised or marketed as having or producing the taste or aroma of candy, chocolate, vanilla, fruit, berry, nut, herb, spice, honey, or an alcoholic drink. "Characterizing flavor" does not include a taste or aroma from tobacco. "Premium cigar" means any roll for smoking that: (1) Is wrapped in whole tobacco leaf; (2) Contains a one hundred per cent leaf tobacco binder; (3) Contains at least fifty per cent (of the filler by weight) long filler tobacco; (4) Is handmade or hand rolled; (5) Has no filter, non-tobacco tip, or non-tobacco mouthpiece; (6) Does not have a characterizing flavor other than tobacco; (7) Contains only tobacco, water, and vegetable gum with no other ingredients or additives; and (8) Weighs more than six pounds per thousand units." 2. By amending the definition of "tobacco products" to read: ""Tobacco products" means: (1) 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 cigars, premium cigars, and any substitutes thereof other than cigarettes that bear the semblance thereof, snuff, chewing or smokeless tobacco, and smoking or pipe tobacco; or (2) Electronic smoking devices; or (3) E-liquid." 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, 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) 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) 50.00 cents for each premium cigar of any length sold, used, or possessed by a wholesaler or dealer on or after January 1, 2025, whether or not sold at wholesale, or if not sold, then at the same rate upon the use by the wholesaler or dealer; [(12)] (13) Seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, premium 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)] (14) 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)] (15) 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 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, 2024. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that the definition of "premium cigar", once proposed by the United States Food and Drug Administration, as discussed in Cigar Ass'n of Am. v. U.S. Food & Drug Admin., 480 F.Supp.3d 256 (D.D.C. 2020), and used in Cigar Ass'n of Am. v. U.S. Food & Drug Admin., No. 16-cv-01460 (APM), (D.D.C. Aug. 9, 2023), distinguishes premium cigars from other tobacco products.
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51	51	The legislature further finds that local premium cigar sellers whose products are made for adult consumers, including cigars produced with Hawaii-grown tobacco, are unfairly burdened by being subject to a non-differentiated state percentage tax that is generally passed on to customers. As a result, cigar retailers are put at a competitive disadvantage as lower priced premium cigars can be purchased from the mainland United States or through the black market at a significantly lower cost.
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53	53	The legislature finds that it is necessary to ease the unfair burden on the local premium cigar industry that has been at a competitive disadvantage due to the percentage tax, which can also help the State collect more tax revenue as in-state premium cigar sales should increase when prices become more competitive with the other states.
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55	55	Accordingly, the purpose of this Act is to:
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57	57	(1) Establish a definition for "premium cigar" that is distinct from a "large cigar";
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59	59	(2) Exclude premium cigars from percentage excise tax; and
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61	61	(3) Establish an excise tax on premium cigars at a rate of 50 cents per premium cigar.
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63	63	SECTION 2. Section 245-1, Hawaii Revised Statutes, is amended as follows:
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65	65	1. By adding two new definitions to be appropriately inserted and to read:
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67	67	""Characterizing flavor" means a distinguishable taste or aroma of candy, chocolate, vanilla, fruit, berry, nut, herb, spice, honey, or an alcoholic drink that is imparted to tobacco or tobacco smoke either before or during consumption. Tobacco products are deemed to have a "characterizing flavor" if the product is advertised or marketed as having or producing the taste or aroma of candy, chocolate, vanilla, fruit, berry, nut, herb, spice, honey, or an alcoholic drink. "Characterizing flavor" does not include a taste or aroma from tobacco.
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69	69	"Premium cigar" means any roll for smoking that:
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71	71	(1) Is wrapped in whole tobacco leaf;
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73	73	(2) Contains a one hundred per cent leaf tobacco binder;
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75	75	(3) Contains at least fifty per cent (of the filler by weight) long filler tobacco;
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77	77	(4) Is handmade or hand rolled;
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79	79	(5) Has no filter, non-tobacco tip, or non-tobacco mouthpiece;
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81	81	(6) Does not have a characterizing flavor other than tobacco;
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83	83	(7) Contains only tobacco, water, and vegetable gum with no other ingredients or additives; and
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85	85	(8) Weighs more than six pounds per thousand units."
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87	87	2. By amending the definition of "tobacco products" to read:
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89	89	""Tobacco products" means:
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91	91	(1) 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 cigars, premium cigars, and any substitutes thereof other than cigarettes that bear the semblance thereof, snuff, chewing or smokeless tobacco, and smoking or pipe tobacco; or
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93	93	(2) Electronic smoking devices; or
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95	95	(3) E-liquid."
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97	97	SECTION 3. Section 245-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
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99	99	"(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:
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101	101	(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;
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103	103	(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;
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105	105	(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;
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107	107	(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;
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109	109	(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;
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111	111	(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;
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113	113	(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;
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115	115	(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;
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117	117	(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;
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119	119	(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;
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121	121	(11) 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;
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123	123	(12) 50.00 cents for each premium cigar of any length sold, used, or possessed by a wholesaler or dealer on or after January 1, 2025, whether or not sold at wholesale, or if not sold, then at the same rate upon the use by the wholesaler or dealer;
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125	125	[(12)] (13) Seventy per cent of the wholesale price of each article or item of tobacco products, other than large cigars, premium 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;
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127	127	[(13)] (14) 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
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129	129	[(14)] (15) 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.
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131	131	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."
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133	133	SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
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135	135	SECTION 5. This Act shall take effect on July 1, 2024.
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139	139	INTRODUCED BY: _____________________________
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141	141	INTRODUCED BY:
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149	149	Report Title: Tobacco Products; Premium Cigars; Definition; Excise Tax Description: Establishes a definition for "premium cigar" that is distinct from a "large cigar" and adds a definition for "characterizing flavor" in the Cigarette Tax and Tobacco Tax Law. Excludes premium cigars from percentage excise tax. Establishes an excise tax at a rate of 50 cents per premium cigar. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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157	157	Report Title:
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159	159	Tobacco Products; Premium Cigars; Definition; Excise Tax
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163	163	Description:
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165	165	Establishes a definition for "premium cigar" that is distinct from a "large cigar" and adds a definition for "characterizing flavor" in the Cigarette Tax and Tobacco Tax Law. Excludes premium cigars from percentage excise tax. Establishes an excise tax at a rate of 50 cents per premium cigar.
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173	173	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.