Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Energy & Environmental Protection, to which was referred S.B. No. 1453, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to assess the public service company tax on private sewer companies and facilities.

Your Committee finds that, until recently, public utility companies, including private sewer companies were subject to the public service company tax under chapter 239, Hawaii Revised Statutes. A recent tax appeals court decision, however, found that the public service company tax does not apply to private sewer companies because the current definition of "gross income" (which is subject to the tax) under chapter 239, Hawaii Revised Statutes, does not include the gross income received by private sewer companies.

This bill corrects this statutory oversight by including private sewer companies under the definition of "gross income" under chapter 239, Hawaii Revised Statutes, to clarify that the gross income received by a private sewer company is subject to the public service company tax.

Your Committee finds that this bill levels the playing field for public utility companies by ensuring that all public utility companies are treated and taxed at the same rate under the public service company tax.

The Department of Taxation, four members of the Maui County Council, the County of Hawaii Finance Department, and the Hawaii State Association of Counties submitted testimony in support of this bill. The Tax Foundation of Hawaii also submitted comments.

As affirmed by the record of votes of the members of your Committee on Energy & Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1453, S.D. 2, and recommends that it pass Second Reading and be referred to the Committee on Consumer Protection & Commerce.