STAND. COM. REP. NO. 841-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2794
                                     H.D. 3




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No.
2794, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to clarify the applicability of
the general excise tax (GET) to offshore aircraft leasing
companies by:

     (1)  Exempting from the GET, amounts received as rent for
          the rental or leasing of aircraft or aircraft engine
          used by the lessees or renters for the interstate air
          transportation of passengers; and

     (2)  Providing that the existing use tax exemption for the
          leasing of aircraft or aircraft engines is for the
          acquisition or importation of any aircraft or aircraft
          engine by any lessee or renter engaged in interstate
          air transportation.

     Hawaiian Airlines and an individual testified in support of
this measure.  Aloha Airlines testified in support of the intent
of this measure.  The Department of Taxation opposed this
measure.  The Tax Foundation of Hawaii submitted comments.

     Your Committee is cognizant of the cost concerns that would
be passed on to the neighbor island residents.  


 
 
                                 STAND. COM. REP. NO. 841-00
                                 Page 2

 
     Your Committee has amended this measure by:
 
     (1)  Adding the definition of "interstate air
          transportation" to mean the same as in 49 U.S.C. 40102;

     (2)  Changing the effective date of the Act to July 1, 2020;
          and

     (3)  Making technical, nonsubstantive amendments for
          purposes of clarity and style.


     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2794, H.D. 2, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 2794, H.D.
3.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair