STAND. COM. REP. NO. 275

Honolulu, Hawaii

RE: S.B. No. 656

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Transportation, to which was referred S.B. No. 656 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Include helicopters in the definition of "aircraft" for purposes of the aircraft service and maintenance facility general excise tax exemption;

(2) Expand the types of aircraft eligible for the aircraft service and maintenance facility general excise tax exemption by removing the qualification of an aircraft having two or more jet engines; and

(3) Eliminate the space requirements for the aircraft service and maintenance facility general excise tax exemption and add a requirement that seventy-five percent of helicopters serviced within any aircraft service and maintenance facility be equipped with quiet technology.

Your Committee received testimony in support of this measure from the Blue Hawaiian Helicopters. Your Committee received testimony in opposition to this measure from the Office of the Mayor of the County of Hawai‘i, Life of the Land, and three individuals. Your Committee received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, Safari Aviation Inc., Activities and Attractions Association of Hawaii, and one individual.

Your Committee finds that the State relies on a well-functioning aircraft industry in order to have a strong and robust economy. In order to ensure the health of the aircraft industry, the State offers an exemption to the general excise tax for the servicing and maintenance of aircrafts. In existing law, helicopters are not considered an aircraft and therefore do not receive the advantages of a general excise tax exemption. Your Committee further finds that due to Hawaii's vast and natural beauty, helicopters have grown increasingly popular for tours. This measure would encourage the expansion of the helicopter industry in Hawaii, resulting in an increase in revenue for the State.

Your Committee has amended this measure by:

(1) Specifying the tax period that the taxpayer must meet the seventy-five percent threshold requirement;

(2) Reinstating the space requirement for an aircraft service and maintenance facility; and

(3) Inserting a definition for "quiet technology".

As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 656, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 656, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Transportation,

________________________________

LORRAINE R. INOUYE, Chair