STAND. COM. REP. NO. 3074

Honolulu, Hawaii

RE:    H.B. No. 2458

       H.D. 2

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Hawaiian Affairs, to which was referred H.B. No. 2458, H.D. 2, entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to require a wholesale rate of an unspecified per cent of general excise taxes to apply to the gross proceeds of sale or gross income arising from the sale of all products produced from Hawaiian loko i‘a.

     Your Committee received testimony in support of this measure from the Office of Hawaiian Affairs, Aha Moku Advisory Committee, Makaha Hawaiian Civic Club, and one individual.  Your Committee received testimony in opposition to this measure from the Department of the Attorney General.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that Hawaiian loko i‘a are culturally significant and valuable to the State of Hawaii.  Your Committee further finds that this measure helps to preserve the practice of sustainable aquaculture.

     Your Committee has heard the concerns of the Department of Taxation regarding the administrative burden of creating a new tax rate exclusively for Hawaiian loko i‘a products and the concerns of the Department of the Attorney General regarding the Commerce Clause of the United States Constitution.

     Accordingly, your Committee has amended this measure by:

     (1)  Inserting one-half of one percent as the amount of the wholesale general excise tax rate;

     (2)  Amending the definition of "Hawaiian loko i‘a" to further clarify that the tax rate shall not discriminate against interstate commerce; and

     (3)  Inserting an effective date of July 1, 2050, to encourage further discussion.

     Your Committee notes the concerns of the Department of Taxation relating to identification of Hawaiian loko i‘a products and requests that if your Committee on Ways and Means decides to hear this measure, it consider S.B. No. 537, S.D. 1, Regular Session of 2015, as a resource for guidance.

     As affirmed by the record of votes of the members of your Committee on Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2458, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2458, H.D. 2, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Hawaiian Affairs,

________________________________

MAILE S.L. SHIMABUKURO, Chair