STAND. COM. REP. NO. 360

Honolulu, Hawaii

RE:    S.B. No. 805

       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 Economic Development and Taxation, to which was referred S.B. No. 805, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO MILITARY RESERVE COMPONENTS,"

begs leave to report as follows:

     The purpose of this measure is to benefit Hawaii residents serving in the various branches of the military and National Guard.

     Specifically, this measure provides an exemption from vehicle taxes and registration fees for members of the National Guard, Reserves, and other active duty military, including the Coast Guard who are in good standing and claim Hawaii as their home of record.

     Testimony in support of this measure was submitted by the Hawaii State Departments of Defense, Taxation, and Transportation.  The Tax Foundation of Hawaii submitted comments.

     Your Committee finds that it is important to show appreciation to those serving in our military and reserve forces for their commitment to our country.  This incentive will also help in influencing our highly trained and experience soldiers to remain in reserve components and assist in the military's recruitment programs.  This measure is reasonable, especially given that many vehicles go unused when they are called to service.

     Your Committee has received a revenue impact statement from the Department of Taxation (Department) that indicates a revenue loss of $407,000 to the State Highway Fund per year, if the measure were limited to National Guard and reserves.  There will be no revenue loss to the general fund.

     In its methodology, the Department estimated the average weight per passenger vehicle to be 4,560 lbs.  By applying the $0.01 per pound state tax rate and adding the $20.00 registration fee, the average tax and fee per vehicle is $65.60.  Applying this exemption to all 6,200 members of the National Guard and reserves, the result is a $407,000 loss.

     No statement has been provided detailing the impact of expanding the measure to include other resident active duty personnel, including the Coast Guard.

     As affirmed by the record of votes of the members of your Committee on Economic Development and Taxation that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 805, S.D. 1, and recommends that it be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development and Taxation,

____________________________

CAROL FUKUNAGA, Chair