Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Agriculture, to which was referred H.B. No. 1091 entitled:

begs leave to report as follows:

The purpose of this bill is to help level the playing field for local aquaculture producers with foreign and United States Mainland aquaculture producers by expanding the "wholesaler" definition under the General Excise Tax (GET) Law to the income received by a taxpayer in certain transactions with a commercial aquaculture producer or cooperative.

Specifically, this bill applies the .05 percent wholesale GET rate to sales to a commercial aquaculture producer or cooperative of materials, supplies, or commodities, or the rental or leasing of equipment used by the commercial aquaculture producer or cooperative in the production of aquaculture products for sale.

The Hawaii Aquaculture Association and the Hawaii Farm Bureau Federation testified in support of the measure. The Department of Agriculture and the Tax Foundation of Hawaii submitted comments on the measure. The Department of Taxation testified in opposition to the measure.

Your Committee recognizes the importance of Hawaii's growing aquaculture industry to the state economy, and therefore, passed the bill. However, your Committee is aware of fiscal concerns with regard to tax application that was brought up in discussion. It is the understanding of your Committee that the aquaculture industry and the Department of Taxation will work together to address technical concerns that are consistent with the legislative intent of this Committee.

As affirmed by the record of votes of the members of your Committee on Agriculture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1091 and recommends that it pass Second Reading and be referred to the Committee on Finance.