STAND. COM. REP. NO.  462-16

Honolulu, Hawaii

                , 2016

RE:   H.B. No. 2458

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ocean, Marine Resources, & Hawaiian Affairs, to which was referred H.B. No. 2458 entitled:

"A BILL FOR AN ACT RELATING TO THE GENERAL EXCISE TAX,"

begs leave to report as follows:

The purpose of this measure is to encourage the cultivation of loko i‘a, Hawaiian fishponds, by applying a favorable wholesale general excise tax rate to aquacultural products produced in loko i‘a.  

The Office of Hawaiian Affairs and Ko‘olaupoko Hawaiian Civic Club and one concerned individual submitted testimony in support of this measure.  Ho‘omana Pono, LLC submitted testimony in opposition.  The Department of the Attorney General, Department of Taxation, and Tax Foundation of Hawaii submitted comments.

     Your Committee notes that the Department of the Attorney General raised concerns in testimony that the favorable tax rate applied by this measure to products which, by definition, are only able to be produced in Hawaii may invite scrutiny under the Commerce Clause of the United States Constitution.  The Attorney General opined that this measure, when read in conjunction with the state-specific definition of a Hawaiian fishpond, may provide a distinct advantage to products produced within the State over those produced elsewhere in interstate commerce.

     Your Committee has amended this measure by changing its effective date to December 24, 2088, to encourage further discussion.

     As affirmed by the record of votes of the members of your Committee on Ocean, Marine Resources, & Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2458, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2458, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Ocean, Marine Resources, & Hawaiian Affairs,

____________________________

KANIELA ING, Chair