STAND. COM. REP. NO. 667

Honolulu, Hawaii

RE:    S.B. No. 595

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 595 entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

     The purpose and intent of this measure is to expand the definition of the term "agricultural commodity" to exempt amounts received from the loading, transportation, and unloading of milk, poultry, eggs, poultry carcass, poultry meat, and aquaculture and aquaponics products to be consumed in the State, whether processed in the State or imported, from the general excise tax.

     Your Committee received written comments in support of this measure from the Hawaii Cattlemen's Council, Hawaii Farm Bureau Federation, Hawaii Food Industry Association, and Ulupono Initiative.

     Your Committee received written comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

     Your Committee finds that, under current law, amounts received for loading, transporting, and unloading agricultural commodities are exempt from the general excise tax.  However, the term "agricultural commodity" is narrowly defined, under section 147-1, Hawaii Revised Statutes, to only include fresh fruits, fresh vegetables, nuts, coffee, and honey.  Your Committee believes that milk, poultry, eggs, poultry carcass, poultry meat, and aquaculture and aquaponics products are also important agricultural commodities that should be afforded the same tax treatment.

     Your Committee has amended this measure by:

     (1)  Adding definitions for the terms "aquaculture products" and "aquaponics products";

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

     (3)  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. 595, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 595, S.D. 1.

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

____________________________

DAVID Y. IGE, Chair