Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Third Special Session of 2001

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 6 entitled:

begs leave to report as follows:

The purpose of this bill is to provide a tax savings to transportation service providers by allowing them to pay the general excise tax in lieu of the public service company tax. This would allow them to pay a four percent tax based on their actual income for the current period.

Your Committee notes that S.B. No. 6 is a companion measure to H.B. No. 6 which your Committee reported out earlier in an unamended form, and the contents of these bills are identical. On October 23, 2001, both the Senate and the House held an extensive public hearing on S.B. No. 6 and H.B. No. 6, at which time many citizens and organizations testified on these measures.

Under current law, transportation service providers are subjected to the public service company tax which is generally measured at the rate of four percent on the gross income from the provider's business earned in the previous taxable year. This tax is preferred under more favorable economic conditions. However, your Committee realizes that under declining economic conditions, a transportation service provider may pay more in taxes than its current gross income can support.

Given the current and anticipated economic climate, your Committee finds that passage of this measure will result in a tax savings to transportation service providers and, in turn, stimulate the economy.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 6 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.