STAND. COM. REP. NO. 2054

Honolulu, Hawaii

RE: S.B. No. 2565

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Agriculture and Environment, to which was referred S.B. No. 2565 entitled:

"A BILL FOR AN ACT RELATING TO TAX EXEMPTION,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a general excise tax exemption for gross proceeds arising from the sale of farm equipment and machinery to certain producers of agricultural products.

Your Committee received testimony in support of this measure from the Department of Agriculture; Hawaii Crop Improvement Association; Hawai‘i Farm Bureau; Maui County Farm Bureau; Hawaii Cattlemen's Council, Inc.; Hawaii Aquaculture & Aquaponics Association; Hawaii Farmers Union United; and thirty-four individuals. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that farm equipment and machinery are costly to the average farmer, who typically earns an average of only $35,000 annually. This measure seeks to provide some financial relief to Hawaii's farmers.

Your Committee has amended this measure by:

(1) Clarifying that items intended for sale in the ordinary course of business, which are excluded from the definition of "farm equipment and machinery" in this measure, are items purchased for the purpose of resale;

(2) Making the measure applicable to taxable years beginning after December 31, 2019; and

(3) 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 Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2565, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2565, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,

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MIKE GABBARD, Chair