STAND. COM. REP. NO. 302

Honolulu, Hawaii

RE:    S.B. No. 1409

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred S.B. No. 1409 entitled:

"A BILL FOR AN ACT RELATING TO CAPTIVE INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to establish a cap of $200,000 on the annual premium tax paid by captive insurance companies licensed by the Department of Commerce and Consumer Affairs.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs and one individual.  The Tax Foundation of Hawaii provided comments.

     Your Committee finds, based upon the testimony provided, that the current tax structure provides for a descending rate that is applied to the amount of annual premiums written by a captive licensee.  This measure, which establishes a $200,000 cap on the premium tax, will encourage the creation of more captive insurance companies in Hawaii and will make Hawaii's captive tax structure comparable to several other jurisdictions.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1409 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Affordable Housing,

____________________________

BRIAN T. TANIGUCHI, Chair