STAND. COM. REP. NO. 2769

Honolulu, Hawaii

RE:    S.B. No. 2913

       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 S.B. No. 2913, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to exempt from the general excise and use taxes fuel sold from a foreign trade zone that is used by common carriers for interisland air transportation.

     Your Committee received testimony in support of this measure from the Hawaii Chapter of the March of Dimes, Aloha Airlines, the Transport Workers Union, the Aloha Airlines Pilots' Union, the International Association of Machinists and Aerospace Workers, District 141, and the Association of Flight Attendants.  The Governor's Tourism Liaison submitted testimony in opposition.  Your Committee received comments on the measure from the Tax Foundation of Hawaii.

     Your Committee finds that the sale of fuel sold from a foreign-trade zone for use by carriers traveling out-of-state is exempt from general excise and use taxes.  However, carriers traveling interisland routes are not exempt.

     This measure levels the playing field for interisland carriers by extending the tax exemption enjoyed by carriers traveling out-of-state to carriers traveling interisland.

     Your Committee has amended the measure by:

     (1)  Correcting underlying statutory language to reflect the printed version of the Hawaii Revised Statutes at page 2, line 14;

     (2)  Clarifying the definition of "interisland air transportation";

     (3)  Clarifying references to the tax exemption in appropriate general excise tax and use tax laws; and

     (4)  Making technical amendments that have no substantive effect.

     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 S.B. No. 2913, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2913, S.D. 2.

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

____________________________

ROSALYN H. BAKER, Chair