STAND. COM. REP. NO. 110

Honolulu, Hawaii

, 2005

RE: H.B. No. 1389

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Tourism & Culture, to which was referred H.B. No. 1389 entitled:

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

begs leave to report as follows:

The purpose of this bill is to provide, upon declaration by the Governor after certain fiscal requirements are met, a temporary general excise tax (GET) exemption on amounts received by:

(1) A submanager of an association of apartment owners of a condominium property regime or a nonprofit homeowners or community association, in reimbursement of sums paid for common expenses;

(2) An operator of a hotel from a timeshare association equal to and which are disbursed by the operator for employee wages, salaries, payroll taxes, insurance premiums, and benefits; and

(3) A suboperator of a hotel from the owner of the hotel, operator of the hotel, or a timeshare association, equal to and which are disbursed by the suboperator for employee wages, salaries, payroll taxes, insurance premiums, and benefits.

Outrigger Hotels supported this measure and suggested an amendment. The Department of Taxation opposed this measure. The Tax Foundation of Hawaii offered comments.

Your Committee believes that this measure provides equitable tax treatment for submanagers of certain residential property associations, and for operators and suboperators of hotels and timeshares. However, your Committee notes that for this bill to take effect, a declaration from the Governor, after certain fiscal conditions are met, is required. Your Committee believes that this restriction is onerous and ambiguous and would hamper the implementation of the GET exemptions.

Therefore, your Committee has amended this bill by deleting the requirement that the bill take effect only upon a declaration from the Governor after certain fiscal conditions have been met. In addition, your Committee has:

(1) Deleted the provision establishing that the tax exemptions apply to amounts received after December 1, 2005; and

(2) Deleted the repeal date of January 1, 2010.

As affirmed by the record of votes of the members of your Committee on Tourism & Culture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1389, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1389, H.D. 1, and be referred to the Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Tourism & Culture,

 

____________________________

JERRY L. CHANG, Chair