STAND. COM. REP. NO. 152

Honolulu, Hawaii

RE:    S.B. No. 1496

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Human Services and Public Housing, to which was referred S.B. No. 1496 entitled:

"A BILL FOR AN ACT RELATING TO AN EXEMPTION FROM THE GENERAL EXCISE TAX,"

begs leave to report as follows:

     The purpose of this measure is to exempt the sale of food qualifying under the Women, Infants, and Children Program administered by the federal Food and Nutrition Service of the United States Department of Agriculture from the general excise tax.

     The Governor and the Department of Taxation submitted testimony in support of this measure.

     Your Committee received a fiscal impact statement from the Department of Taxation that this measure, if passed, would result in a revenue loss to the State of approximately $15,000,000 for the first year and $40,000,000 per year thereafter.  However, the fiscal impact statement submitted did not specify the methodology by which the fiscal impact was calculated.

     Your Committee finds that undertaking the exemption of foods from any tax is a daunting task because of the indeterminate definition of the term "food."  However, as one testifier noted, the United States Department of Agriculture already requires grocery stores that participate in the Women, Infants, and Children Program to exempt the eleven food groups that it identified as essential foods from local and state taxes.  Therefore, most, if not all, grocery stores are prepared to accommodate the exemption of the foods on the list.  The types of groceries that will be exempt from the food tax include milk, eggs, cheese, canned salmon and tuna, carrots, peanut butter, juices, cereals, beans, peas and lentils, as well as infant formula and infant cereal.

     Your Committee has amended this measure by making technical, nonsubstantive changes for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Human Services and Public Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1496, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1496, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Human Services and Public Housing,

____________________________

SUZANNE CHUN OAKLAND, Chair