HONOLULU (HawaiiNewsNow) – Hawaii lawmakers are working on legislation to close a loophole in the state tax law on cigarettes. It allows smokers to acquire cigarettes without paying the hefty cigarette tax as long as they roll their own.
A carton of pre-rolled cigarettes can cost upwards of $100. Part of the cost is the state tax that adds 16-cents to the price of every cigarette. But shops have opened around the state offering a huge discount, cartons for as little as $25.
People avoid paying the cigarette tax because they purchase tobacco before it is rolled. They can then either use small machines to roll one cigarette at a time, or rent large machines that spit out as many as 200 smokes in less than eight minutes.
Senator Rosalyn Baker has introduced legislation to close the loophole.
"We are trying to level the taxation field between cigarettes and other tobacco products so that particularly young people who are very price sensitive to the cost of items don't move from cigarettes to attractively priced other tobacco products," Baker told Hawaii News Now.
Baker's tobacco tax bill (Senate Bill 2422) comes up for a final vote in the Senate next week. If it passes as she expects, her bill will go to the House for consideration. The House failed to pass a similar bill earlier this legislative session.
The smoke shops are worried a change in the tobacco tax law may put them out of business.