Report Title:

Rental Motor Vehicle Surcharge Tax

Description:

Repeals the rental motor vehicle surcharge tax of $3 per day levied between September 1, 1999 and August 31, 2007.

THE SENATE

S.B. NO.

1133

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO RENTAL MOTOR VEHICLE SURCHARGE TAX.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that there has been a significant increase in revenues to the state general fund. This increase in revenues is expected to continue through 2007 and probably longer in view of Hawaii's positive tourism outlook.

The legislature further finds that it is fair and appropriate to reduce the rental motor vehicle surcharge tax on the rental motor vehicle industry. The tax, enacted by Act 263, Session Laws of Hawaii 1991, was $2 per day. Act 223, Session Laws of Hawaii 1999, temporarily raised the tax to $3 per day for the period from September 1, 1999 to August 31, 2007, with an exception for renters whose own vehicles are being repaired. The purpose of the increase was to temporarily produce added revenues to bolster the general fund. The legislature finds that the State's general fund is realizing better than anticipated revenues as of 2005. According to the governor's press release dated Monday, December 20, 2004:

"The budget was developed as the state is enjoying a robust economy and moderate revenue growth, while also facing rapidly rising fixed costs. The general fund operating budget is proposed to grow by $444 million (11 percent) in FY06 and $561 million (14.2 percent) in FY07. Fixed costs will consume 78 percent of the new spending in FY06 and 84 percent of the new spending in FY07. After covering the fixed costs, the increase in the budget is only 2.2 percent in FY06 and 2 percent in FY07."

No other industry has similarly been assessed and has endured such a tax increase to assist the State's general fund.

In fairness to the motor vehicle rental industry and some of its members who have recently experienced bankruptcy, the legislature further finds that it is only fair and appropriate to immediately, rather than in 2007, reduce the $3 daily surcharge to the original $2 per day.

The legislature further finds that the $3 per day rental motor vehicle surcharge tax does not help Hawaii's competitive image as a fair and attractive tourist destination. A return to the $2 per day tax is appropriate.

The purpose of this Act is to reduce the $3 per day rental motor vehicle surcharge tax to $2 per day.

SECTION 2. Section 251-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is levied and shall be assessed and collected each month a rental motor vehicle surcharge tax of $2 a day[, except that for the period of September 1, 1999, to August 31, 2007, the tax shall be $3 a day,] or any portion of a day that a rental motor vehicle is rented or leased. The rental motor vehicle surcharge tax shall be levied upon the lessor; provided that the tax shall not be levied on the lessor [during the period September 1, 1999, to August 31, 2007,] if:

(1) The lessor is renting the vehicle to replace a vehicle of the lessee that is being repaired; and

(2) The repair order for the vehicle is retained by the lessor for four years for verification purposes."

SECTION 3. Statutory material to be repealed is bracketed and stricken.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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