STAND. COM. REP. 718

Honolulu, Hawaii

, 2003

RE: H.B. No. 1224

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 1224 entitled:

"A BILL FOR AN ACT RELATING TO THE AMENDMENT OR REPEAL OF OBSOLETE TAX LAWS,"

begs leave to report as follows:

The purpose of this bill is to amend or repeal obsolete tax laws by:

(1) Designating the tax reserve fund in section 231-23, Hawaii Revised Statutes (HRS), a trust fund rather than a special fund as recommended by the State Auditor;

(2) Defining "manufacturer" in section 237-1, HRS, to ensure that taxpayers selling tangible personal property to a manufacturer qualify for the wholesale tax rate;

(3) Defining "retailer" and "sales at retail" for chapters 237 and 238, HRS;

(4) Repealing section 237-13(1), HRS, because manufacturers that ship tangible personal property out of the State are subject to the general excise tax (GET) under section 237-13(2)(D), HRS, and no longer subject to the GET under section 237-29.5, HRS;

(5) Repealing imposition of the GET on the activity of "producing" in section 237-13(2), HRS, because producers that ship tangible personal property out of the State are subject to the GET under section 237-13(2)(D) and no longer subject to the GET under section 237-29.5, HRS, and;

(6) Making housekeeping amendments to the GET and use tax laws for consistency with other amendments in the bill;

(5) Repealing the GET exemption for locally-produced goods in section 237-24.3, HRS, which was held unconstitutional by the Hawaii Supreme Court;

(6) Repealing sections 237-8.5 and 238-2.5, HRS, relating to the obsolete GET and use tax surcharge tax proposed for funding a mass transit system;

(7) Repealing section 237-16, HRS, which imposes the GET on certain retailing and is duplicative of section 237-13, HRS, which imposes the GET on all business activities, including retailing; and

(8) Repealing section 237-28.2, HRS, relating to the exemption for producers of motion picture of television films which expired on July 1, 1976.

The Department of Taxation testified in support of this bill. The Tax Foundation of Hawaii submitted comments.

While your Committee is aware that this measure makes largely housekeeping amendments, your Committee is nevertheless concerned over the possible implications of repealing the one-half percent tax on manufacturers. It is the wish of your Committee that this issue be further scrutinized during the remainder of the legislative process.

Accordingly, your Committee has amended this bill by changing its effective date to July 1, 2010. Technical, nonsubstantive amendments have also been made for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1224, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1224, H.D. 1, and be placed on the calendar for Third Reading.

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

 

____________________________

DWIGHT Y. TAKAMINE, Chair