Smokers, beer drinkers
hit by ‘ice’ bill

The taxes arre meant
for the anti-drug war

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By Bruce Dunford
Associated Press

Smokers would have to cough up another quarter a pack and beer drinkers another 14 cents a six-pack to raise $24 million for programs to combat the state's crystal methamphetamine, or "ice," addiction epidemic under a bill moving in the state House.

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The bill setting up a Substance Abuse Prevention, Education and Treatment Special Fund recommended by the House Judiciary Committee was given preliminary House approval and is now before the House Finance Committee.

Democratic leaders say the tax hikes are just one of the funding options being considered in coming up with some $20 million to combat the ice epidemic.

State Budget Director Georgina Kawamura and Department of Taxation Director Kurt Kawafuchi said Friday that the Lingle administration is opposed to the bill because it calls for increased taxes.

During the 41-8 House vote on Feb. 20, eight of 15 Republicans voted against the measure, but several other GOP members said they couldn't recall knowing the bill included increased taxes.

Minority Leader Galen Fox (R, Waikiki-Ala Moana) said he opposes any increases in taxes and wants to make sure that drug treatment funding only goes for programs that are shown to be effective.

The liquor and tobacco industries, apparently caught off guard by the proposed tax hikes, are expected to object to the increases if and when the bills are heard by the Finance Committee. As of Friday, a hearing had not been scheduled.

The Tax Department said that adding a 25-cent surcharge to the tax rates on all types of liquor would generate about $9 million in new revenues while the 25-cent surcharge on a pack of cigarettes would generate another $15 million, based on current sales.

The surcharge tax would add 2.3 cents to the current 8.7 cents per bottle tax on beer, or nearly 14 cents more a six-pack. The 25-cent surcharge would also be added to the other types of alcoholic beverages that are taxed per gallon at rates from 54 cents for draft beer to $5.98 for hard liquors like whiskey, rum and vodka.

It represents a 27 percent increase in the tax on beer, but only a 4 percent increase in the tax on the hard stuff.

House Finance Committee Chairman Dwight Takamine (D, Hawi-Hilo) earlier indicated a bill to use $2.4 million of the state's Tobacco Settlement Special Fund's anti-smoking program revenues for ice treatment and prevention programs won't advance.

Meanwhile, the Senate Health Committee has approved and sent to the Ways and Means Committee a bill to increase the tobacco tax 10 cents a pack and use $10 million in revenues from that and an already scheduled 10-cent per pack increase on July 1 for drug treatment and prevention.

House Judiciary Committee Chairman Eric Hamakawa (D, Hilo-Glenwood) said the $24 million from the tobacco and liquor tax hikes would be focused on the ice problem and remedies proposed by the Joint House-Senate Task Force on Ice and Drug Abatement.

It's in addition to the $19 million in state and federal funds the Lingle administration has budgeted for a wide range of drug education, prevention and treatment and youth activities, he said.

The idea of the bill "is to give the Finance Committee as many options as we can. And how they ultimately chose to fund the program, they have to look at the whole picture. It's not something I have jurisdiction over," Hamakawa said.

Senate Ways and Means Committee Chairman Brian Taniguchi (D, Moiliili-Manoa) said if the House bill reaches the Senate, he's open to it.

"We are looking for funding sources. The budget is real tight. At this point in the legislative process, we have to look at as many options as we can," he said.

Raising so-called "sin taxes" to get revenues for worthy causes "is not a novel concept," Taniguchi said.