REPORT TITLE:
GET; Federal Contracts


DESCRIPTION:
Exempts from the general excise tax amounts received from federal
contractors by contractors or subcontractors provided 100% of the
stockholders, owners, managers, and employees are residents.
Requires a state contracting license for federal construction
projects in Hawaii to the extent allowed under federal law. (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1556
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO GENERAL EXCISE TAX.



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

 1      SECTION 1.  The legislature finds that attention must be
 
 2 focused on Hawaii's struggling construction industry.  Due to
 
 3 fierce competition from foreign contractors and the high costs to
 
 4 do business in this State, Hawaii's contractors and
 
 5 subcontractors have been experiencing serious economic declines.
 
 6      The purpose of this Act is to provide tax exemptions for
 
 7 Hawaii's contractors and subcontractors to help rejuvenate their
 
 8 businesses and provide Hawaii's construction industry with more
 
 9 business and employment opportunities.
 
10      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 
11 by adding a new section to be appropriately designated and to
 
12 read as follows:
 
13      "�237-     Exemption of federal construction contracts.  (a)
 
14 Any provision of the law to the contrary notwithstanding, there
 
15 shall be exempted from, and excluded from the measure of the
 
16 taxes imposed by this chapter, all of the gross proceeds arising
 
17 from federal construction contracts and received by resident
 
18 contractors and subcontractors licensed under chapter 444 and
 
19 doing business in the State.
 

 
Page 2                                                     1556
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 1      (b)  For the purposes of this section, a resident contractor
 
 2 or subcontractor is doing business in the State if one hundred
 
 3 per cent of its stockholders, owners, managers, and employees:
 
 4      (1)  Reside in the State at least two hundred days of the
 
 5           year; and
 
 6      (2)  Filed a Hawaii state resident income tax in the
 
 7           previous last taxable year."
 
 8      SECTION 3.  Section 444-1, Hawaii Revised Statutes, is
 
 9 amended by amending the definition of "contractor" to read as
 
10 follows:
 
11      ""Contractor" means any person who by oneself or through
 
12 others offers to undertake, or holds oneself out as being able to
 
13 undertake, or does undertake to alter, add to, subtract from,
 
14 improve, enhance, or beautify any realty or construct, alter,
 
15 repair, add to, subtract from, improve, move, wreck, or demolish
 
16 any building, highway, road, railroad, excavation, or other
 
17 structure, project, development, or improvement, or do any part
 
18 thereof, including the erection of scaffolding or other
 
19 structures or works in connection therewith.
 
20      "Contractor" includes a subcontractor, a specialty
 
21 contractor, and any person, general engineering, general
 
22 building, or specialty contractor who performs any of the
 
23 activities listed in the previous paragraph directly or
 

 
Page 3                                                     1556
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 indirectly for the federal government[.], to the extent allowed
 
 2 under federal law."
 
 3      SECTION 4.  Statutory material to be repealed is bracketed.
 
 4 New statutory material is underscored.
 
 5      SECTION 5.  This Act shall take effect on July 1, 1999.