Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 1583 entitled:

begs leave to report as follows:

The purpose of this bill is to support members of the military by exempting from state income taxes any income received by a member of the armed forces and reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard, and the Hawaii National Guard during the time the member is assigned by military orders outside of Hawaii.

The Department of Defense and several concerned citizens testified in support of this measure. The Department of Taxation supported the intent of this bill. The Tax Foundation of Hawaii provided comments.

Your Committee received testimony stating that other qualified military benefits are already exempt from taxation under the Internal Revenue Code, to which Hawaii conforms. Clarifying that the exemption provided is for basic pay will eliminate confusion over this provision.

Accordingly, your Committee has amended this bill by:

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. 1583, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1583, H.D. 1.