STAND. COM. REP. NO. 2671

Honolulu, Hawaii

RE:    S.B. No. 2977

       S.D. 2

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 2977, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to establish an income tax credit for aviation fuel taxes paid by interisland airplane carriers to transport people and goods between the islands of this State using turbo propeller airplanes.

     Your Committee finds that the tax credit established by this measure would assist interisland airplane carriers by reducing their overall fuel costs.  Your Committee also finds that this would enable the carriers to keep fares low, which benefits interisland air travelers.  However, your Committee believes that it is counterproductive to limit a carrier's ability to qualify for this tax credit based on the type of aircraft the carrier operates.

     Your Committee has amended this measure by:

     (1)  Deleting the requirement that an interisland airplane carrier operate turbo propeller airplanes to qualify for the tax credit established by this measure;

     (2)  Clarifying the tax credit is for aviation fuel taxes passed on to an interisland airplane carrier by a distributor;

     (3)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

     (4)  Making technical nonsubstantive amendments for the purposes of consistency, clarity, and style.

     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. 2977, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2977, S.D. 2.

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

____________________________

DAVID Y. IGE, Chair