STAND. COM. REP. NO. 1766

Honolulu, Hawaii

RE: H.B. No. 1370

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1370, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the liquor tax law.

More specifically, this measure amends the definition of draft beer to mean beer in an individual container of five gallons or more.

Your Committee received written comments in support of this measure from Beer Lab HI, Big Island Brewhaus LLC, Hanalei Spirits Distillery, Kauai Beer Company, Kona Brewing Hawaii, Koolau Distillery, Maui Brewing Co., Napali Brewing Company, and one individual.

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

Your Committee finds that the existing taxation scheme on beer is confusing, burdensome, and unfairly discriminatory. Your Committee also finds that a lower tax rate is imposed on draft beer, which is statutorily defined as beer in an individual container of seven gallons or more. However, this container size requirement does not align with industry practices. Your Committee further finds that most retailers, restaurants, and bars, as well as many local small brewers, dispense what is commonly referred to as draft beer from kegs smaller than seven gallons.

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 H.B. No. 1370, H.D. 1, S.D. 1, and recommends that it pass Third Reading.

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

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DONOVAN M. DELA CRUZ, Chair