STAND. COM. REP. NO. 45

Honolulu, Hawaii

RE:    S.B. No. 1506

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committees on Commerce, Consumer Protection, and Affordable Housing and Transportation and International Affairs, to which was referred S.B. No. 1506 entitled:

"A BILL FOR AN ACT RELATING TO RENTAL MOTOR VEHICLE SURCHARGE TAX,"

beg leave to report as follows:

     The purpose of this measure is to maintain the rental motor vehicle surcharge at $3 a day and to appropriate funds out of the State Highway Fund for operational costs, maintenance, and capital improvements on the State highway system.

     Your Committees received testimony in support of this measure from the Department of Taxation and the Department of Transportation.

     Catrala Hawaii, Avis Budget Group, Dollar Rent A Car, Enterprise Rent-A-Car, and Thrifty Car Rental submitted testimony in opposition to this measure.

     Comments on this measure were received from the Hawaii Insurers Council and the Tax Foundation of Hawaii.

     Your Committees find that the rental vehicle surcharge tax is a major revenue source for the State Highway Fund, contributing approximately twenty-five per cent of all the revenues deposited into the fund.  The existing law allows for the rental vehicle surcharge tax to revert to $2 a day on September 1, 2007, which would reduce revenue for much needed repairs on the State highway system.

     Your Committees have amended this measure by deleting the specific amount appropriated from the State Highway Fund to promote further discussion, making the appropriation effective on July 1, 2007, and making technical, nonsubstantive changes for purposes of clarity and style.

     Your Committees note that this measure, as part of the Administration Package, would maintain the tax at $3 per day and make this amount permanent instead of allowing the tax to revert back to $2 per day. 

     As affirmed by the records of votes of the members of your Committees on Commerce, Consumer Protection, and Affordable Housing and Transportation and International Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1506, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1506, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committees on Commerce, Consumer Protection, and Affordable Housing and Transportation and International Affairs,

____________________________ J. KALANI ENGLISH, Chair

____________________________ BRIAN T. TANIGUCHI, Chair