SB 681: RELATING TO THE GENERAL EXCISE TAX.

A BILL FOR AN ACT

RELATING TO THE GENERAL EXCISE TAX.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 209E-11, Hawaii Revised Statutes, is amended to read as follows:

     "§209E-11  State general excise exemptions.  The department shall certify annually to the department of taxation that any qualified business is exempt from the payment of general excise taxes on the gross proceeds from an eligible business activity as defined in this chapter; provided that agricultural businesses [other than those engaged in the production of genetically-engineered agricultural products] shall not be exempt from the payment of general excise taxes on the gross proceeds of agricultural retail sales.  The gross proceeds received by a contractor licensed under chapter 444 shall be exempt from the general excise tax for construction within an enterprise zone performed for a qualified business within an enterprise zone or a business that has been approved by the department to enroll into the enterprise zone program.  The exemption shall extend for a period not to exceed seven years; provided that for qualified businesses engaged in the manufacturing of tangible personal property or the producing or processing of agricultural products, the exemption shall extend for a period not to exceed ten years; provided further that if a force majeure event occurs, then the period of time shall be tolled until the force majeure event ceases."

     SECTION 2.  Statutory material to be repealed is bracketed and stricken.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

General Excise Tax; Exemption; Agricultural Businesses; Genetically Engineered Agricultural Products; Repeal

Description:

Repeals the exemption to the general excise tax for agricultural businesses engaged in the production of genetically engineered agricultural products.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 177

Honolulu, Hawaii

RE:    S.B. No. 681

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Agriculture and Environment, to which was referred S.B. No. 681 entitled:

"A BILL FOR AN ACT RELATING TO THE GENERAL EXCISE TAX,"

begs leave to report as follows:

     The purpose and intent of this measure is to repeal the exemption to the general excise tax for agricultural businesses engaged in the production of genetically engineered agricultural products.

     Your Committee received testimony in support of this measure from the Hawaiʻi Farmers Union United, Climate Protectors Hawaii, Women Organizing for Change in Agriculture and Natural Resource Management, Hawaiʻi Progressive Action, Green Party of Hawaiʻi, and twenty-six individuals.

     Your Committee received testimony in opposition of this measure from the Hawaiʻi Farm Bureau, Hawaii Crop Improvement Association, and Biotechnology Innovation Organization.

     Your Committee received comments on this measure from the Department of Agriculture; Department of Business, Economic Development, and Tourism; Department of Taxation; and Tax Foundation of Hawaii.

     Your Committee finds that the primary goal of the general excise tax exemption for genetically engineered agricultural products was to promote the export of seed crops and to foster the creation of high-paying technology jobs in businesses that produce genetically engineered agricultural products, ultimately increasing employment and the gross domestic product of the State.  Since then, the priorities of the State have shifted to focus on local food systems and enhancing food security.  As a result, many agricultural producers have expressed concerns that the genetically engineered agricultural product industry is receiving an undue advantage through this tax exemption.  By repealing the exemption for agricultural businesses engaged in the production of genetically engineered agricultural products, this measure promotes a more competitive and fair business environment by ensuring that all businesses that produce agricultural products, whether organic, conventional, or genetically modified in nature, are treated equitably under the State Tax Code. 

     As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 681 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,