HI HB408

Imposes Hawaii's general excise tax on passenger transportation furnished by common carriers using aircraft, but only when flights begin and end within the airspace of a single island.

Clarifies that intra-island aircraft transportation is not considered "air commerce" or "air transportation" under federal law (title 49 United States Code section 40102), and therefore is not prohibited from state taxation.

Addresses the legislature's interpretation that the 1983 Supreme Court decision in Aloha Airlines v. Director of Taxation was misapplied by the Department of Taxation, which incorrectly exempted all aircraft tours from general excise tax collection.

Amends Hawaii Revised Statutes Section 237-18 to add subsection (i) establishing the tax requirement for intra-island aircraft passenger transportation while maintaining the federal prohibition on interstate air transportation taxes.

Takes effect July 1, 2021, and does not apply to rights, duties, penalties, or proceedings that occurred before the effective date.