STAND. COM. REP. NO. 607

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 32

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Madam:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 32, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO FUEL,"

 

begs leave to report as follows:

 

     The purpose of this measure is to make permanent the general excise tax exemption on gross income or proceeds from the sale of alcohol fuels.

 

Your Committee received one written comment on this measure.  Copies of written comments submitted are available for review on the Legislature’s website.

 

Your Committee finds that section 2 of Act 209, Session Laws of Hawaii 2007 exempted gross income or proceeds from the sales of alcohol fuels from the general excise tax.  The Act also required producers, wholesalers, and retailers of alcohol fuels to pass on their savings from the tax exemption to consumers.  Since all motor vehicle fuel sold in the State is required to have a ten per cent ethanol content, the tax exemption amounted to a small reduction in the price of transportation fuels at a time when consumers were facing record fuel prices.  Section 2 of Act 209 will sunset on July 1, 2009, at which time, the gross income or proceeds from the sales of alcohol fuels will no longer be exempt from the general excise tax. 

 

     Your Committee recognizes that the repeal of the general excise tax exemption on alcohol fuels evokes two compelling points of view.  On one hand, repealing the exemption will prevent additional revenue loss for the State at a time when overall tax revenues are decreasing.  It has also been suggested that a higher price for motor vehicle fuels will help steer residents toward more energy efficient choices, such as alternative energy vehicles and fuel conservation.  On the other hand, despite recent declines in fuel prices from 2008 record peaks, Hawaii residents still pay some of the highest transportation fuel prices in the nation, and repealing the tax exemption would only add to those already high prices.  Your Committee believes that both positions have merit and that this issue deserves further serious discussion.

 

     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. 32, S.D. 1, and recommends that it pass Third Reading.

 

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

 

		____________________________ DONNA MERCADO KIM, Chair