STAND. COM. REP. NO. 1056

Honolulu, Hawaii

, 2005

RE: H.B. No. 390

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 390, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO RENTAL MOTOR VEHICLE SURCHARGE TAX,"

begs leave to report as follows:

The purpose of this measure is to repeal the increase in the rental motor vehicle surcharge tax effective between September 1, 1999 and August 31, 2007.

Catrala-Hawaii testified in support of the measure. The Departments of Transportation and Taxation opposed the measure and the Tax Foundation of Hawaii presented comments.

Act 263, Session Laws of Hawaii 1991, enacted a $2 per day surcharge on rental motor vehicles to support the state highway fund. Act 223, Session Laws of Hawaii 1999, increased the surcharge to $3 effective September 1, 1999 to August 31, 2007, but authorized an exemption from the surcharge for the rental of a vehicle to replace a vehicle under repair. This measure repeals the temporary increase and makes the exemption permanent.

Your Committee finds that the accumulation of surcharge tax revenues has enabled more than $155 million to be transferred out of the state highway fund over the last eight years to support the general fund budget; therefore, it would appear that a repeal of the surcharge increase may be appropriate. However, your Committee further finds that there are concerns that the potential revenue loss of more than $11 million annually would adversely affect the DOT's ability to maintain the state highway system and further, that the measure may require a retroactive reduction of fees. In light of these unresolved issues, your Committee has amended this measure by inserting an effective date of July 1, 2050 to ensure continued review and discussion.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 390, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 390, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair