STAND. COM. REP. NO.1111

Honolulu, Hawaii

, 2001

RE: H.B. No. 407

H.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs and Government Operations, to which was referred H.B. No. 407, H.D. 1, entitled:

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

begs leave to report as follows:

The purpose of this measure is to direct the Department of Taxation to work with the federal government to devise a system to enforce the collection of general excise taxes from federal contractors working on contracts in Hawaii.

Your Committee received testimony in support of this measure from the Subcontractors Association of Hawaii and the General Contractors Association of Hawaii. The Department of Taxation submitted testimony in opposition to this measure. The Tax Foundation of Hawaii and the Building Industry Association submitted comments.

Your Committee understands that the State of Hawaii collects only approximately twenty-five per cent of the general excise tax revenues it should be receiving from general contractors working on construction projects in Hawaii.

While the Department of Taxation testified that it has in place a system to track and collect taxes from general contractors in Hawaii, that system is not working efficiently enough. Therefore, your Committee supports this measure, which will spur better collection efforts at the Department of Taxation.

Under this measure, the Department shall report to the Legislature prior to the convening of the 2002 Regular Session. At that time, the Legislature can determine whether amendments to the law are necessary to ensure that the State collects all taxes that are due.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 407, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Transportation, Military Affairs and Government Operations,

____________________________

CAL KAWAMOTO, Chair