STAND. COM. REP. 56

Honolulu, Hawaii

, 2003

RE: H.B. No. 719

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 Economic Development and Business Concerns, to which was referred H.B. No. 719 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this bill is to:

(1) Exempt from the general excise tax amounts received after December 31, 1999, as grants in the form of reimbursements for expenditures from an economic development program sponsored by a federal, state, county, or nonprofit organization; and

(2) Allow any credit due a taxpayer from the overpayment of general excise tax under this measure to be claimed as a credit against the taxpayer's general excise tax liability in subsequent years until exhausted.

The Hawaii Farm Bureau Federation, Hawaii Aquaculture Association, Pacific Tropical Ornamental Fish Program, and several individuals submitted testimony in support of this measure.

The Department of Taxation (DOTAX) and Tax Foundation of Hawaii submitted comments.

Your Committee finds that those reimbursed by grants are taxed twice: first for purchasing actual supplies and equipment and a second time upon receiving the grant moneys. Based on discussion during the public hearing, your Committee finds that DOTAX may be able to prevent the claimed double taxation of grant recipients without the passage of this measure. However, further discussion on this issue should be continued until this problem is resolved.

Your Committee has amended this bill by:

(1) Requiring DOTAX to report yearly to the Legislature on the fiscal impact of this measure.

(2) Amending its effective date to facilitate further discussion.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 719, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 719, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,

 

____________________________

BRIAN SCHATZ, Chair