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 S.B. No. 1264, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to encourage the development of aquaculture in the State by:

DOA, Hawaii Farm Bureau Federation, Hawaii Aquaculture Association, and the Kauai County Farm Bureau supported the intent of this bill. The Department of Taxation (DOTAX) opposed this bill. The Tax Foundation of Hawaii submitted comments.

Your Committee would like to thank DOTAX and DOA for their efforts in creating and bringing this bill before your Committee. Your Committee understands that DOTAX plans to work with the agriculture industry to draft rules that will be presented in a tax information bulletin after this legislative session.

Furthermore, your Committee finds that this bill will help Hawaii's developing aquaculture industry by reducing the costs of production for local aquaculture farmers and helping the industry to remain competitive in the emerging world marketplace against low-cost mainland and foreign producers.

Upon further consideration, your Committee has amended this bill by deleting its substance and inserting provisions that would provide that the sale to a licensed producer or cooperative association of seedstock for producing agricultural and aquacultural products, as well as the sale of aquacultural products, will be considered a wholesale sale for purposes of the General Excise Tax.

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 S.B. No. 1264, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1264, S.D. 2, H.D. 1, and be referred to the Committee on Finance.