STAND. COM. REP. NO.  1451

Honolulu, Hawaii

                , 2013

RE:   S.B. No. 1193

      S.D. 1

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No. 1193, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO SECTION 237-24.3, HAWAII REVISED STATUTES,"

begs leave to report as follows:

The purpose of this measure is to eliminate the general excise tax exemption for liquor, tobacco, and food sold to any person or common carrier in interstate or foreign commerce for consumption out of state.

Your Committee received testimony in support of this measure from the Department of Taxation.  Comments were received from the Tax Foundation of Hawaii.

     Your Committee finds that the exemption does not serve the limited purposes for which it was originally enacted.  Although the exemption was intended to benefit state agriculture by encouraging common carriers to buy local agricultural products, it instead creates a broad tax break for all common carriers and the catering companies that serve those common carriers.

     Your Committee has amended this measure by:

(1)  Changing the effective date to "upon approval" and making the measure applicable to taxable years beginning after December 31, 2013;

(2)  Adding language to ensure the preservation of the amendments made to section 237-24.3, Hawaii Revised Statutes, when the section is repealed and reenacted on December 31, 2014; and

(2)  Making technical nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1193, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1193, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

____________________________

SYLVIA LUKE, Chair