STAND. COM. REP. NO. 1468

Honolulu, Hawaii

RE:    S.C.R. No. 62

       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.C.R. No. 62 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE HAWAII STATE LEGISLATURE TO CONVENE A HAWAII BROADBAND TASK FORCE TO EXPAND BROADBAND ACCESS AND USAGE IN HAWAII,"

begs leave to report as follows:

     The purpose of this measure is to convene a Hawaii Broadband Task Force to remove barriers to broadband access, including gaining wider access to public rights-of-way, and identifying opportunities for increased broadband deployment and adoption, including very high speed broadband services.

     Prior to the hearing your Committee circulated a Proposed S.C.R. No. 62 entitled:

"REQUESTING THE DEPARTMENT OF TAXATION TO CONDUCT A REVIEW OF Hawaii's General Excise Tax Pyramiding Relief Act,"

     The purpose of the proposed measure is to request the Department of Taxation to conduct a review Hawaii's General Excise Tax Pyramiding Relief Act and to consider clarifying language to make clear that the general excise tax is not due on business‑to‑business services that fulfill a warranty obligation to the manufacturer.

     Testimony in support of the proposed language was received from the Department of Taxation and the Hawaii Automotive Dealers' Association.

     Your Committee finds that at least two other states, California and Washington, have dealt with this issue, and that there may be additional options in other jurisdictions.

     Your Committee has amended this measure by:

     (1)  Amending the title to read:

          "REQUESTING THE DEPARTMENT OF TAXATION TO CONDUCT A REVIEW OF HOW OTHER STATES AND JURISDICTIONS ENSURE THAT WARRANTIES AND MAINTENANCE AGREEMENTS ARE EITHER EXEMPTED FROM PAYMENT OF ADDITIONAL TAXES OR TAXED AT THE WHOLESALE RATE;"

     (2)  Deleting one "whereas" paragraph related to clarification of Act 71, Session Laws of Hawaii 1999;

     (3)  Amending the "be it resolved" paragraph to reflect the title change and to incorporate language from the second "be it further resolved" paragraph; and

     (4)  Requesting the Department of Taxation to submit proposed legislation for introduction at the Regular Session of 2008.

     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 concurs with the intent and purpose of S.C.R. No. 62, as amended herein, and recommends its adoption in the form attached hereto as S.C.R. No. 62, S.D. 1.

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

____________________________

CAROL FUKUNAGA, Chair