STAND. COM. REP. NO.  280

Honolulu, Hawaii

                , 2009

RE:   H.B. No. 371

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Sir:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 371, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to maintain the viability of naphtha as fuel for power-generating facilities, by making permanent the one-cent per gallon tax on naphtha sold for use in a power-generating facility to produce electricity.

     Kauai Island Utility Cooperative and Hamakua Energy Partners, L.P. testified in support of this bill.  The Department of Taxation, Department of Health, Department of Transportation, and Tax Foundation of Hawaii provided comments.

     Naphtha is an environmentally cleaner, petroleum-based fuel for power generation due to its lower sulfur content and lower levels of emitted carbon dioxide upon burning.  Certain power generating stations have air pollution control permits requiring the burning of naphtha to achieve lower stack emissions.  By making permanent the one-cent per gallon tax on naphtha used to produce electrical power, this bill clarifies that such uses of naphtha are not subject to higher fuel license taxes under section 243-4, Hawaii Revised Statutes.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 371, H.D. 1, and recommends that it be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

____________________________

ROBERT N. HERKES, Chair