STAND. COM. REP. NO. 2780

Honolulu, Hawaii

RE: S.B. No. 222

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 222, S.D. 1, 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 provide a general excise tax exemption for the sale of certain medical equipment, supplies, and prescription drugs.

More specifically, the measure:

(1) Provides a general excise tax exemption for amounts received from the sale of mobility enhancement equipment, durable medical equipment, prescription drugs sold pursuant to a doctor's prescription, diabetic supplies, prosthetic devices, medical oxygen, and human blood and its derivatives; and

(2) Expands the definition of "prosthetic devices" to include devices that are worn on the body.

Your Committee received written comments in support of this measure from the Hawaii Chapter of the American Physical Therapy Association, Honolulu County Republican Party, and OCC Legislative Priorities Committee of the Democratic Party of Hawaii.

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

Your Committee finds that this measure will benefit individuals with health conditions and disabilities and senior citizens who live on limited income by exempting necessary medical devices from the state general excise tax.

Your Committee has amended this measure by:

(1) Changing the effective date to January 1, 2019;

(2) Applying the measure to taxable years beginning after December 31, 2018;

(3) Making corrections to the quoted text of section 237-24.3, Hawaii Revised Statutes, to reflect statutory language scheduled to take effect on January 1, 2019; and

(4) Making technical nonsubstantive amendments for the purposes of clarity, consistency, 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. 222, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 222, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair