STAND. COM. REP. NO. 2945

Honolulu, Hawaii

RE:    H.B. No. 2922

       H.D. 1

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred H.B. No. 2922, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO FUEL TAX,"

begs leave to report as follows:

     The purpose of this measure is to reduce the license tax on diesel oil from two cents to one cent per gallon if the diesel oil is used in a power-generating facility.

     Testimony in support of this measure was submitted by Kauai Island Utility Cooperative.  Testimony in opposition to this measure was submitted by the Department of Transportation. Comments were submitted by the Director of Taxation and the Tax Foundation of Hawaii.

     Act 209, Session Laws of Hawaii 2007, increased the rate of license tax imposed upon fuel distributors by section 243-4, Hawaii Revised Statutes, by an additional one cent per gallon of various types of fuel.  Your Committee finds that in enacting Act 209, the Legislature did not intend the increased rate to apply to diesel oil sold or used for electrical power-generating facilities.  Rather, your Committees believe that the intent of the Act was to tax transportation related fuels that did not contain alcohol and not diesel oil used in power-generating facilities.

     The Director of Taxation has suggested to your Committee that the definition of "power-generating facilities" contained in section 243-1, Hawaii Revised Statutes, will be repealed on December 31, 2009.  As such, a permanent definition of that term should be provided.

     Your Committee has amended this measure by deleting the contents of this measure and replacing it with the contents of S.B. No. 2519, S.D. 1.  The amended measure achieves identical goals of the original measure, but removes the definition of "power-generating facilities" contained in section 243-1, Hawaii Revised Statutes, from the provisions that will be repealed on December 31, 2009.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2922, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2922, H.D. 1, 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 Energy and Environment,

____________________________

RON MENOR, Chair