SB 2399

THE SENATE
S.B. NO.
2399
THIRTY-THIRD LEGISLATURE, 2026
S.D. 2
STATE OF HAWAII
H.D. 1
A BILL FOR AN ACT
RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT
MAINTENANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION
1.� The legislature finds that many
states, including Arizona, California, Colorado, Connecticut, Florida, Georgia,
Iowa, Kansas, Massachusetts, Minnesota, New York, North Carolina, Ohio,
Pennsylvania, Texas, and Wisconsin, explicitly exempt aircraft parts from their
sales tax if sold to a federally licensed aircraft carrier.� In Hawaii, there is an exemption in the
general excise tax law for aircraft servicing and maintenance.� However, the Hawaii Intermediate Court of
Appeals has recently decided that the exemption language does not exempt from
the general excise tax the sale of parts to an aircraft carrier, even though
the complementary use tax law explicitly exempts from the use tax imports of
these parts from an out-of-state seller.
���� To correct
this imbalance, recognize the critical importance of the airline industry to
the State, and ensure competitiveness with other states in attracting and
maintaining aircraft maintenance jobs and facilities, the purpose of this Act
is to provide a general excise tax exemption for the sale of material, parts,
or tools that are used for aircraft service and maintenance or for the
construction of an aircraft service and maintenance facility.
���� SECTION 2.� Section 237-24.9, Hawaii Revised Statutes, is
amended to read as follows:
���� "�237-24.9�
Aircraft service [[and]], maintenance facility[[.]],
and sale of related materials.�
(a)� This chapter shall not apply
to amounts received from the servicing and maintenance of aircraft [[or]],
from the construction of an aircraft service and maintenance facility in the
State[[.]], or from the sale of material, parts, or tools to a licensed
aircraft carrier if they are purchased for aircraft service and maintenance or
for the construction of an aircraft service and maintenance facility.
���� (b)� [[As used in]] For the purposes of
this section:
���� "Aircraft"
means any craft or artificial contrivance of whatever description engaged in
intrastate, interstate, or international scheduled commercial use as defined in
chapter 263, that operates with two or more jet engines.
���� "Aircraft
service and maintenance" means all scheduled and unscheduled tasks
performed within an aircraft service and maintenance facility for the
inspection, modification, maintenance, and repair of aircraft and related
components, including engines, hydraulic and electrical systems, and all
other components [[which]] that are an integral part of an
aircraft.
���� "Aircraft
service and maintenance facility" means a facility for aircraft service
and maintenance that is not less than thirty thousand square feet in area, and [[which]]
may include ancillary space [[which]] that is integral to the
facility, such as parts and inventory warehouse space, tool rooms, and related
administrative and employee space.
���� "Construction
of an aircraft service and maintenance facility" means all design,
engineering, labor, and material costs associated with the construction of
facilities the [[[]]principal[[]]] purpose of which is the provision
of facilities for aircraft service and maintenance.
���� "Licensed
aircraft carrier" means an airline or aircraft operator that has an air
carrier certificate from the Federal Aviation Administration and United States
Department of Transportation pursuant to title 14 Code of Federal Regulations parts
121 and 135 to transport passengers or cargo.
���� "Maintenance"
means the upkeep of aircraft engines, hydraulic and electrical systems, and all
other components [[which]] that are an integral part of an
aircraft, but does not include refueling, janitorial services or cleaning,
restocking of aircraft and passenger supplies, or loading or unloading of cargo
and passenger baggage."
���� SECTION
3.� Statutory material to be repealed is
bracketed and stricken.� New statutory
material is underscored.
���� SECTION 4.� This Act shall take effect on July 1, 3000.
Report Title:
Taxation;
General Excise Tax; Aircraft Service and Maintenance
Description:
Provides
a general excise tax exemption for the sale of material, parts, or tools used
for aircraft service and maintenance or for the construction of an aircraft
service and maintenance facility.�
Effective 7/1/3000.� (HD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.