STAND. COM. REP. NO. 2118

Honolulu, Hawaii

RE:    S.B. No. 2977

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Transportation and International Affairs, to which was referred S.B. No. 2977 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to provide an aviation fuel tax credit for interisland airplane carriers that use turbo propeller airplanes.

     Your Committee received testimony in opposition of this measure from the State Department of Transportation.  Comments were received from the Department of Taxation, State Attorney General, Tax Foundation, and Hawaiian Airlines.

     Your Committee finds that interisland airplane carriers provide needed competition in the interisland aviation market by setting lower fares.  Any reduction in costs to these carriers would enable the carriers to keep fares low, which benefits interisland air travelers.

     Your Committee has amended this measure on the recommendation of the Department of Taxation and the State Attorney General by amending chapter 243, Hawaii Revised Statutes, relating to fuel taxes, rather than chapter 235, Hawaii Revised Statutes, relating to income taxes.

     As affirmed by the record of votes of the members of your Committee on Transportation and International Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2977, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2977, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Transportation and International Affairs,

____________________________

J. KALANI ENGLISH, Chair