STAND. COM. REP. NO. 3329

Honolulu, Hawaii

RE:    H.B. No. 2306

       H.D. 2

       S.D. 2

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred H.B. No. 2306, H.D. 2, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO GENERAL EXCISE TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to avoid increasing the costs of health care services delivered to military members or their dependents through the TRICARE program.

Specifically, this measure exempts from the state general excise tax amounts received by managed care support contractors as reimbursements of costs or advances made pursuant to a contract for the administration of the federal TRICARE program.  This measure would become effective upon approval and is retroactive to January 1, 2005.

     Testimony in support of this measure was submitted by TriWest Healthcare Alliance, Inc.  Comments on this measure were submitted by the Department of Taxation and the Tax Foundation of Hawaii.

     Your Committee finds that this measure would clarify that reimbursements received by managed care support contractors through the TRICARE program, for health services provided to military personnel or their dependents in Hawaii, are not subject to the state general excise tax.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2306, H.D. 2, S.D. 2, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

ROSALYN H. BAKER, Chair