Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1322 entitled:

begs leave to report as follows:

The purpose of this measure is to eliminate the insurance premium tax on health insurers.

Your Committee finds that health insurers organized under article 10A of chapter 431, Hawaii Revised Statutes, are currently subject to a premium tax rate of 4.265 per cent on gross premiums, while mutual benefit societies and health maintenance organizations, organized respectively under chapters 432 and 432D, Hawaii Revised Statutes, are exempt from this tax requirement.

Your Committee further finds that exempting health insurers from the premium tax may help to attract additional health insurers to enter the health insurance market in this State, by helping to level the playing field among health insurance providers in Hawaii.

Upon further consideration, your Committee has amended this measure by making a technical amendment to correct the effective date to specify that the measure shall apply to all gross premiums received after June 30, 2003, and by making other technical nonsubstantive changes.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1322, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1322, S.D. 1.