Don't extinguish tobacco tax hike


POSTED: Friday, May 15, 2009

What Gov. Linda Lingle regards as flaws in tobacco-tax increases approved by this year's Legislature should not negate intended hikes, despite an unfortunate technical error that will result in a $400,000 “;tax holiday for many tobacco products.”;

The legislators' intent is clear in two separate bills and most, if not all, of the changes made should be implemented.

Legislators overturned Lingle's veto of a bill that called for more than doubling the tax on tobacco products other than cigarettes, including “;little cigars,”; over the next two years. The governor's strongest reason for the veto was its departure from the method that manufacturers, retailers and the federal government use in the labeling of large and small cigars, possibly making the new law impossible to enforce.

Lingle signed into law another measure that would increase the tax on cigarettes, now at $2 a pack, to $2.60 a pack in July, $2.80 a year later, and $3 in July 2011. A previous schedule had increases to $2.20 a pack at the end of September, to $2.40 next year and $2.60 in 2011.

The question is whether the “;little cigar”; bill, which included the old cigarette tax schedule, negates the cigarette tax increases in the other bill. That clearly is not what the Legislature intended.

Bills to amend existing law are written to include the statute in effect at the time, with unwanted existing language crossed out and proposed new language underlined. Thus, the text of the “;little cigar”; measure—House Bill 895—included the entire section of the law on tobacco taxes, including the cigarette tax schedule that was in effect at the time, and underlined proposed new language for taxes on little cigars. The crossing out of the cigarette tax in effect at the beginning of the Legislature occurred in the text of House Bill 1175, with the proposed increases underlined.

State law calls for a “;revisor”; in the Legislative Reference Bureau to transfer new laws into the existing statutes. In her veto message, Lingle said it is “;questionable”; whether the bureau “;can properly reconcile these matters”; in doing so.

Rep. Marcus Oshiro, the House Finance Committee chairman, is confident that the revisor will be able to blend the two bills to reflect the Legislature's intention to raise taxes for both cigarettes and other tobacco products. However, he acknowledges that a brief “;tax holiday,”; raising the cigarette tax now and lowering it on Sept. 30, may be unavoidable, at a cost of $400,000 in state revenue.