STAND. COM. REP. NO. 1261

Honolulu, Hawaii

, 2005

RE: S.B. No. 1870

S.D. 1

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 1870, S.D. 1, entitled:

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

begs leave to report as follows:

The purpose of this bill is to create a level playing field for all building projects by requiring owner-builders to pay the general excise tax on the value of building their personal residence.

Hidano Construction, Inc., the Building Industry Association of Hawaii, General Contractors Association of Hawaii, Subcontractors Association of Hawaii, and Hawaii Laborers-Employers Cooperation Educational Trust testified in support of this bill. The City and County of Honolulu Department of Planning and Permitting opposed this measure. The Department of Taxation (DOTAX), Tax Foundation of Hawaii, and Hawaii Association of Realtors provided comments.

Your Committee finds that the intent of the exemption from general excise tax for owner-builders is to provide a tax break for individuals building homes for their personal use. However, there is concern that some owner-builders are building homes, occupying them for a short period of time, then selling them.

It is not the intent of your Committee to impose an additional tax or create an undue burden on the counties, but rather to enforce the intent of the current law. Simply requiring owner-builders to submit an information return to DOTAX will help curb any abuse that may be occurring.

Accordingly, your Committee has amended this bill by removing its contents and inserting provisions that:

(1) Require every person who claims to be exempt from the general excise tax as an owner-builder to file an information return no later than 30 days after the actual completion of the project;

(2) Establish a lien immediately upon the sale or disposition of the land or improvements until the general excise tax is paid; and

(3) Exempting the Department of Hawaiian Home Lands and Housing and Community Development Corporation of Hawaii from the filing requirement.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1870, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1870, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Housing,

 

____________________________

MICHAEL P. KAHIKINA, Chair