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Friday, December 15, 2000

Hawaii State Seal

New stamp
aims to snuff out
untaxed smokes

By Pat Omandam

The way the state collects taxes on cigarettes changes at the stroke of midnight on New Year's Eve, in a move to "stamp out" those who sell untaxed cigarettes in Hawaii.

Beginning Jan. 1, cigarette and tobacco wholesalers and dealers will be required to affix small square stamps to individual cigarette packages as proof the 5-cents-a-pack taxes were paid on the smokes.

And come April 1, all cigarette packs sold in the state, except at military stores and markets, must have the Hawaii black-and-green cigarette tax stamp on it. Those who sell them without the stamps face fines and penalties, said Nathan Chee, staff attorney at the rules office at the state Department of Taxation.

"This is not a new tax, but the same tax with a stamp," Chee explained. "Now when you buy cigarettes, there is nothing to tell you if taxes were paid on the cigarettes. Hopefully, with the stamps it will be easier to enforce."

Chee said legitimate cigarette distributors have long complained that there are many businesses throughout Hawaii that sell untaxed cigarettes at lower prices. The state takes in about $40 million a year in cigarette and tobacco taxes but can only guess as to how much more revenue it could generate from the untaxed cigarette black market.

Earl Hoke, state deputy attorney general, said at least two people will be assigned to investigate reports and complaints about unstamped cigarettes after April 1. They will also independently check on cigarette sales. And plans are under way for a hot line for people to call to report businesses that sell unstamped cigarettes, he said.

Chee said small "mom and pop" stores should not have any problems if they purchase their cigarettes from legitimate suppliers who are paying the tax. The only thing noticeable will be the new tax stamp on the individual packs. The law also applies to cigarettes sold in vending machines.

According to the law, it will be a Class C felony to sell 1,000 or more cigarettes without a tax stamp or to keep, store or transport 3,000 or more cigarettes without the stamp. Violators would face a fine of at least $500 but no more than $1,000.

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