STAND. COM. REP. NO. 114

Honolulu, Hawaii

RE:    S.B. No. 1318

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 1318 entitled:

"A BILL FOR AN ACT RELATING TO USE TAX,"

begs leave to report as follows:

     The purpose and intent of this measure is to clarify the current application of the use tax by eliminating overbroad and redundant language in a provision relating to interstate commerce activities.

     Your Committee received testimony in support of this measure from Frederick D. Pablo, Interim Director, Department of Taxation.  Your Committee received comments on this measure from the Tax Foundation of Hawaii.

     Your Committee finds that Act 74, Session Laws of Hawaii 1979, was enacted to prevent the State from taxing stevedoring and other similar activities.  Since the enactment of Act 74, however, state tax laws have been amended to expressly exempt the particular stevedoring and other interstate commerce activities originally intended to be exempted pursuant to Act 74, making language in the current use tax law referencing Act 74 redundant and unnecessary.

     Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and style.

     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 S.B. No. 1318, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1318, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

DAVID Y. IGE, Chair