Honolulu, Hawaii March 29, 2011– A controversial proposal to increase certain tobacco taxes in Hawaii is running headlong against individual constituent interests, says the International Premium Cigar and Pipe Retailers Association.
Hawaii House Bill 273 proposes to change the excise tax on all tobacco products, other than cigarettes, from 70 percent of the wholesale price to $3.20 for each article or item of tobacco product, other than a large cigar. A minimum tax rate of $3.20 is proposed per package of five cigars, adjusted accordingly for packages of less than or more than five and provided that no cigar with a wholesale price less than $1 shall be sold in packages of fewer than five.
“This convoluted bill is as confusing as the rationale behind it,” said Chris McCalla, legislative director of the IPCPR. “It has been proven in other states that increased taxes on tobacco products results in lower sales of those products and, consequently, lower tax revenues from those products.”
McCalla added that higher taxes on tobacco products also results in lost jobs and damaged businesses.
“When sales plummet, salespeople are let go and, eventually, businesses fail,” McCalla said. “These are not times when we can sacrifice jobs, income and taxes instead of doing whatever we can to create new jobs, stimulate revenues and support small businesses.”
McCalla explained that those customers who remain after the tax increases go into effect likely will resort to out-of-state mail-order or bootlegged cigars.
“The result will be a significant loss of sales and excise tax revenues to the state, job losses and the closing of businesses across the state. Is this what Hawaii needs today?” McCalla asked.
“Government should not be taxing out of business those businesses that have every right to exist. What other businesses and products have survived after absorbing such exorbitant tax increases? None. There are better ways to prevent children from using non-cigarette tobacco products, ways that don’t end up destroying jobs, families and communities,” said McCalla.