Taxes; Intrastate Aviation; Foreign Trade Zone; Exemption
Exempts from general excise and use taxes the fuel sold from a foreign-trade zone for intrastate air transportation by common carriers. (HB2860 HD2)
HOUSE OF REPRESENTATIVES
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that a healthy inter-island airline industry is vital to the state's economy. Hawaii's inter-island airlines continue to face severe financial challenges. Fuel costs in particular have skyrocketed and grown volatile in recent years. In fact, for most airlines, the cost of fuel has surpassed labor as the highest operating cost factor.
Sales of fuel sold from a foreign-trade zone for use by airlines traveling out-of-the-state are exempt from general excise and use taxes. However, inter-island flights are not exempt. To the extent that the Hawaii general excise and use taxes are being applied to inter-island flights, the Federal Aviation Act, which includes inter-island flights in the definition of "inter-state air transportation", is being violated.
The legislature finds that exempting common carriers from the general excise and use taxes for sales of fuel from a foreign-trade zone for inter-island flights would level the playing field and create a fairer market for all airlines.
The purpose of this Act is to exempt common carriers from the general excise and use taxes for fuel sold from a foreign-trade zone to common carriers for use in inter-island air transportation.
SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§237- Aviation fuel for air transportation. This chapter shall not apply to amounts received from the sale of aviation fuel, as defined in section 243-1, categorized as privileged foreign merchandise, non-privileged foreign merchandise, domestic merchandise, or zone-restricted merchandise, that is admitted into a foreign-trade zone and purchased in a foreign-trade zone and is made directly to or is used by a common carrier for consumption or use in air transportation between two points in the state."
SECTION 3. Section 238-1, Hawaii Revised Statutes, is amended by amending the definition of "use" to read as follows:
""Use" (and any nounal, verbal, adjectival, adverbial, and other equivalent form of the term) herein used interchangeably means any use, whether the use is of such nature as to cause the property, services, or contracting to be appreciably consumed or not, or the keeping of the property or services for such use or for sale, the exercise of any right or power over tangible or intangible personal property incident to the ownership of that property, and shall include control over tangible or intangible property by a seller who is licensed or who should be licensed under chapter 237, who directs the importation of the property into the State for sale and delivery to a purchaser in the State, liability and free on board (FOB) to the contrary notwithstanding, regardless of where title passes, but the term "use" shall not include:
(1) Temporary use of property, not of a perishable or quickly consumable nature, where the property is imported into the State for temporary use (not sale) therein by the person importing the same and is not intended to be, and is not, kept permanently in the State. For example, without limiting the generality of the foregoing language:
(A) In the case of a contractor importing permanent equipment for the performance of a construction contract, with intent to remove, and who does remove, the equipment out of the State upon completing the contract;
(B) In the case of moving picture films imported for use in theaters in the State with intent or under contract to transport the same out of the State after completion of such use; and
(C) In the case of a transient visitor importing an automobile or other belongings into the State to be used by the transient visitor while therein but which are to be used and are removed upon the transient visitor's departure from the State;
(2) Use by the taxpayer of property acquired by the taxpayer solely by way of gift;
(3) Use which is limited to the receipt of articles and the return thereof, to the person from whom acquired, immediately or within a reasonable time either after temporary trial or without trial;
(4) Use of goods imported into the State by the owner of a vessel or vessels engaged in interstate or foreign commerce and held for and used only as ship stores for the vessels;
(5) The use or keeping for use of household goods, personal effects, and private automobiles imported into the State for nonbusiness use by a person who:
(A) Acquired them in another state, territory, district, or country;
(B) At the time of the acquisition was a bona fide resident of another state, territory, district, or country;
(C) Acquired the property for use outside the State; and
(D) Made actual and substantial use thereof outside this State;
provided that as to an article acquired less than three months prior to the time of its importation into the State it shall be presumed, until and unless clearly proved to the contrary, that it was acquired for use in the State and that its use outside the State was not actual and substantial;
(6) The leasing or renting of any aircraft or the
keeping of any aircraft solely for leasing or renting to lessees or renters using
the aircraft for commercial transportation of passengers and goods or the
acquisition or importation of any such aircraft or aircraft engines by any
lessee or renter engaged in interstate air transportation. For purposes of
this paragraph, "leasing" includes all forms of lease, regardless of
whether the lease is an operating lease or financing lease. The definition of
"interstate air transportation" is the same as in [
49 U.S.C. 40102]Title
49 United States Code §40102;
(7) The use of oceangoing vehicles for passenger or passenger and goods transportation from one point to another within the State as a public utility as defined in chapter 269;
(8) The use of material, parts, or tools imported or purchased by a person licensed under chapter 237 which are used for aircraft service and maintenance, or the construction of an aircraft service and maintenance facility as those terms are defined in section 237-24.9;
(9) The use of services or contracting imported for resale where the contracting or services are for resale, consumption, or use outside the State pursuant to section 237-29.53(a);
(10) The use of contracting imported or purchased by a contractor as defined in section 237-6 who is:
(A) Licensed under chapter 237;
(B) Engaged in business as a contractor; and
(C) Subject to the tax imposed under section
(11) The use of property, services, or contracting
imported by foreign diplomats and consular officials who are holding cards
issued or authorized by the United States Department of State granting them an
exemption from state taxes[
(12) The use of aviation fuel, as defined in section 243-1, categorized as privileged foreign merchandise, non-privileged foreign merchandise, domestic merchandise, or zone-restricted merchandise that is admitted into a foreign-trade zone and is used by a common carrier by air for consumption in air transportation between two points in the state.
With regard to purchases made and distributed under the authority of chapter 421, a cooperative association shall be deemed the user thereof."
SECTION 4. This Act shall not be construed to imply that any law prior to the effective date of this Act is inconsistent with this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2034.