STAND. COM. REP. NO. 83

Honolulu, Hawaii

RE:    S.B. No. 554

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committee on Agriculture and Environment, to which was referred S.B. No. 554 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 create an exclusion from general excise tax for the gross proceeds of a qualified small farmer from the sale of produce.

     Your Committee received testimony in support of this measure from the Department of Agriculture; Hawaii Cattlemen's Council, Inc.; and Hawai‘i Farm Bureau.  Your Committee received comments on this measure from the Department of Taxation, Department of the Attorney General, and Tax Foundation of Hawaii.

     Your Committee finds that the growth of small, diversified farming businesses adds to and diversifies Hawaii's economy.  Your Committee finds that the creation of an exclusion from general excise tax for the gross proceeds of qualified small farmers will encourage the growth of new, small, and diversified farming businesses, will not significantly affect tax collections by the State, and will improve the long-term economic well-being of the State.

     Your Committee has amended this measure by:

     (1)  As recommended by the Department of the Attorney General, removing language that requires a "qualified small farmer" to cultivate land in the State;

     (2)  As recommended by the Department of Agriculture, specifying that a "qualified small farmer" must grow produce on a parcel of land that is classified and zoned as agricultural land by the Land Use Commission and county in which it is located, respectively;

     (3)  Specifying that a "qualified small farmer" must grow produce on a parcel of land no larger than nine acres;

     (4)  Applying the exemption to gross income or gross proceeds received after December 31, 2017, and before January 1, 2023; and

     (5)  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. 554, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 554, 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