STAND. COM. REP. NO.  1697

 

Honolulu, Hawaii

                , 2007

 

RE:   H.C.R. No. 168

      H.D. 1

 

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

 

Sir:

 

     Your Committees on Consumer Protection & Commerce and Economic Development & Business Concerns, to which was referred H.C.R. No. 168 entitled:

 

"HOUSE CONCURRENT RESOLUTION REQUESTING THE DEPARTMENT OF TAXATION TO STUDY WHETHER LEASES BETWEEN RELATED ENTITIES IN THE CAR RENTAL INDUSTRY SHOULD BE SUBJECT TO HAWAII'S GENERAL EXCISE TAX,"

 

beg leave to report as follows:

 

     The purpose of this concurrent resolution is to request the Department of Taxation (DoTax) to study whether leases between related entities in the car rental industry should be exempt from Hawaii's general excise tax (GET) under section 237-23.5, Hawaii Revised Statutes (HRS), which provides a GET exemption for certain transactions between related entities.

 

     The Hertz Corporation testified in support of this measure.  DoTax, National Car Rental, Alamo Car Rental, Dollar Rent a Car, and Thrifty Car Rental submitted comments.

 

     Some rental car companies finance their vehicles through a special purpose financing entity owned by the company, that issues debt instruments secured by the rental vehicles.  The vehicles are then leased to a car rental agency, owned by the same company, that rents the vehicles to consumers.  These lease transactions between related car rental entities are currently subject to the GET, in addition to the lease transactions between the car rental agency and consumers, even though the car rental agency and special purpose financing entity are owned by the same company.

 

     While this measure seeks to address this issue by requesting DoTax to study whether leases between related car rental entities should be subject to the GET, concerns have been raised as to whether DoTax would be the appropriate agency to determine whether the GET exemption under section 237-23.5, HRS, applies to leases between related car rental entities. 

 

Accordingly, your Committees have amended this measure by:

 

(1)  Amending the title to read: "REQUESTING THE DEPARTMENT OF THE ATTORNEY GENERAL TO DETERMINE WHETHER LEASES BETWEEN RELATED CAR RENTAL ENTITIES ARE EXEMPT FROM THE GENERAL EXCISE TAX AND IF SO, REQUESTING DOTAX TO APPLY THE EXEMPTION";

 

(2)  Substituting the Department of the Attorney General for DoTax as the agency requested to conduct the study; and

 

(3)  Making technical, nonsubstantive amendments for clarity and style.

 

     As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Economic Development & Business Concerns that are attached to this report, your Committees concur with the intent and purpose of H.C.R. No. 168, as amended herein, and recommend that it be referred to the Committee on Finance, in the form attached hereto as H.C.R. No. 168, H.D. 1.

 

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Economic Development & Business Concerns,

 

 

____________________________

KYLE T. YAMASHITA, Chair

 

____________________________

ROBERT N. HERKES, Chair