STAND. COM. REP. NO. 77

Honolulu, Hawaii

RE:    S.B. No. 11

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committees on Health and Intergovernmental and Military Affairs, to which was referred S.B. No. 11 entitled:

"A BILL FOR AN ACT RELATING TO EXCISE TAX ON HEALTH CARE,"

beg leave to report as follows:

     The purpose of this measure is to decrease the financial burden of health care costs on patients in the State.

     Your Committees received testimony in support of this measure from Hawaii Medical Association, the Hawaii Society of Clinical Oncology, Healthcare Association of Hawaii, and ten individuals.  The Hawaii Coalition of Care Home Administrators submitted testimony in support of the intent of this measure with recommendations.  The Department of Taxation submitted testimony with comments on this measure.

     Your Committees find that the costs of health care services are increasing, as are the number of uninsured individuals and their ability to pay for these services.  Your Committees further find that health care services are necessities to living, not a luxury, and; therefore, should not be subject to taxation.

     Your Committees intend to accomplish the purpose of this measure by exempting all medical services performed or provided by a licensed medical practitioner, hospital, medical facility, nursing home or facility, or rehabilitation facility from the county surcharge on the state general excise tax.

     The Department of Taxation submitted a fiscal impact statement regarding this measure indicating that the revenues derived from the Honolulu County surcharge on the general excise tax will be lowered by approximately $9 million for fiscal year 2008 and beyond.  The department further stated that this measure will impact the general fund by a loss of approximately $900,000, or ten per cent of the surcharge collected.

     Your Committees amended this measure by making a technical, nonsubstantive amendment and changing the effective date for the purpose of encouraging further discussion.

     As affirmed by the records of votes of the members of your Committees on Health and Intergovernmental and Military Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 11, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 11, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committees on Health and Intergovernmental and Military Affairs,

____________________________ LORRAINE R. INOUYE, Chair

____________________________ DAVID Y. IGE, Chair