HOUSE OF REPRESENTATIVES

H.B. NO.

2879

TWENTY-FIFTH LEGISLATURE, 2010

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO STATE FUNDS.

 

 

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

 


     SECTION 1.  The purpose of this Act is to temporarily impose a state surcharge on certain business income comprised of state non-general funds.

     The legislature finds that, during these difficult economic times, the state government is a major, consistent, and reliable source of business for many contractors.  Thus, the legislature finds that such contractors should temporarily pay a premium for doing business with the State.

     However, the legislature finds that the surcharge should not be imposed on business income comprised of state general funds, as this would be illogical and unnecessary.  Since the surcharge proceeds are to be deposited into the state general fund, it would be a waste of time and resources to first collect the surcharge and then deposit the proceeds into the same fund from which it came.

     SECTION 2.  Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§231-A  Collection of state surcharge.  (a)  The director of taxation may enter into a memorandum of agreement with any appropriate state officer for the transmittal of the state surcharge levied under sections 237-A, 239-A, and 431:7-A directly to the director.

     If the memorandum of agreement covers a particular state contract, the head of the contracting state department or agency, with the permission of the contractor, shall:

     (1)  Retain from the state non-general funds earned by the contractor under the contract an amount equivalent to the state surcharge; and

     (2)  Transmit the retained amount of state surcharge directly to the director of taxation.

     (b)  Unless transmitted directly to the director of taxation pursuant to a memorandum of agreement, the state surcharge shall be paid to the director of taxation by the person who receives the gross income, gross proceeds of sale, gross premiums, gross underwriting profit, or risk premiums upon which the surcharge is levied and assessed.  The person shall pay the surcharge at the same time as payment of the general excise, public service company, or insurance premium tax levied upon the same gross income, gross proceeds, gross premiums, gross underwriting profit, or risk premiums.

     (c)  The director of taxation shall have the same powers and duties to collect the state surcharge as applicable to the collection of the state tax, the surcharge to which is added.  For this purpose, the "state tax", the surcharge to which is added, shall be deemed to include the surcharge.  To the extent applicable, all provisions of law concerning the collection and appeal of the state tax, the surcharge to which is added, and penalties for delinquency or non-payment of that tax shall also apply to the state surcharge.

     (d)  For the purpose of this section, "state non-general funds" means all funds, other than general funds, expended by a state department or agency, including the office of Hawaiian affairs.  The term includes state general obligation bond funds."

     SECTION 3.  Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§237-A  State surcharge.  (a)  For the purpose of this section, "state non-general funds" means all funds, other than general funds, expended by a state department or agency, including the office of Hawaiian affairs.  The term includes state general obligation bond funds.

     (b)  There is hereby levied, and shall be assessed and collected annually, a state surcharge against a person of one per cent on the gross income or gross proceeds of sale that is:

     (1)  Comprised of state non-general funds;

     (2)  Received by the person under a contract, expressed or implied, with any state department or agency, including the office of Hawaiian affairs; and

     (3)  Taxed at a rate greater than 0.5 per cent by the State under this chapter.

The state surcharge shall be additional to the general excise tax and, if applicable, county surcharge levied under this chapter.

     (c)  If, under the contract with the state department or agency, the gross income or gross proceeds of a person is comprised of both state non-general funds and state general funds, the state surcharge shall be assessed and collected against only the portion comprised of state non-general funds.  In this situation, the state department or agency shall submit to the person and department of taxation an apportionment of the state non-general funds under the contract.

     (d)  All proceeds of the state surcharge shall be realizations of the general fund.

     (e)  The amount of the state surcharge levied under this section shall not be included in "gross income" or "gross proceeds of sale" taxable under section 237-13 or any other provision of this chapter."

     SECTION 4.  Chapter 239, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§239-A  State surcharge.  (a)  For the purpose of this section, "state non-general funds" means all funds, other than general funds, expended by a state department or agency, including the office of Hawaiian affairs.  The term includes state general obligation bond funds.

     (b)  There is hereby levied, and shall be assessed and collected annually, a state surcharge against a public utility of one per cent on the gross income that is:

     (1)  Comprised of state non-general funds;

     (2)  Received by the public utility under a contract, expressed or implied, with any state department or agency, including the office of Hawaiian affairs; and

     (3)  Taxed at a rate greater than 0.5 per cent under section 239-5.

The state surcharge shall be additional to the tax imposed upon a public utility under this chapter.

     (c)  If, under the contract with the state department or agency, the gross income of a public utility is comprised of both state non-general funds and state general funds, the state surcharge shall be assessed and collected against only the portion comprised of state non-general funds.  In this situation, the state department or agency shall submit to the public utility and department of taxation an apportionment of the state non-general funds under the contract.

     (d)  All proceeds of the state surcharge shall be realizations of the general fund of the State.

     (e)  The amount of the state surcharge levied under this section shall not be included in "gross income" taxable under section 239-5 or any other provision of this chapter.

     (f)  This section shall not apply to any carrier that is subject to section 239-6."

     SECTION 5.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 7, part II, to be appropriately designated and to read as follows:

     "§431:7-A  State surcharge.  (a)  For the purpose of this section, "state non-general funds" means all funds, other than general funds, expended by a state department or agency, including the office of Hawaiian affairs.  The term includes state general obligation bond funds.

     (b)  There is hereby levied, and shall be assessed and collected annually, a state surcharge against an authorized insurer on the gross premiums, gross underwriting premiums, or risk premiums, as applicable, that is:

     (1)  Comprised of state non-general funds;

     (2)  Received by the authorized insurer under a contract, expressed or implied, with any state department or agency, including the office of Hawaiian affairs; and

     (3)  Subject to taxation under section 431:7-202.

The rate of the state surcharge shall be twenty-five per cent, rounded to the nearer one-hundredth, of the applicable rate under section 431:7-202.

     The state surcharge shall be additional to the tax imposed under section 431:7‑202 on an authorized insurer's gross premiums, gross underwriting premiums, or risk premiums, as the case may be.

     (c)  If, under the contract with the state department or agency, the gross premiums, gross underwriting profits, or risk premiums of an insurer is comprised of both state non-general funds and state general funds, the state surcharge shall be assessed and collected against only the portion comprised of state non-general funds.  In this situation, the state department or agency shall submit to the insurer and department of taxation an apportionment of the state non-general funds under the contract.

     (d)  All proceeds of the state surcharge shall be realizations of the general fund.

     (e)  The amount of the state surcharge levied under this section shall not be included in "gross premiums", "gross underwriting profits", or "risk premiums" taxable under section 431:7-202."

     SECTION 6.  Section 103D-1008, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§103D-1008[]]  Taxpayer preference.  For evaluation purposes, the bidder's tax-exempt price shall be increased by the applicable retail rate of general excise tax and [the], if applicable, the use tax[.], state surcharge, and county surcharge.  For competitive sealed bids, the lowest responsive, responsible bidder, taking into consideration the above increase, shall be awarded the contract, but the contract amount of any contract awarded shall be the amount of the price offered and shall not include the amount of the increase."

     SECTION 7.  Section 237-8.6, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  No county surcharge on state tax shall be established on any:

     (1)  Gross income or gross proceeds taxable under this chapter at the one-half per cent tax rate;

     (2)  Gross income or gross proceeds taxable under this chapter at the 0.15 per cent tax rate; [or]

     (3)  Amount of the state surcharge levied under section 237-A; or

    [(3)] (4)  Transactions, amounts, persons, gross income, or gross proceeds exempt from tax under this chapter."

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on July 1, 2010; provided that:

     (1)  This Act shall be repealed on June 30, 2015; and

     (2)  Sections 103D-1008 and 237-8.6(d), Hawaii Revised Statutes, amended by sections 6 and 7, respectively, of this Act, shall be reenacted in the form in which they read on the day prior to the effective date of this Act.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

State Surcharge On State Non-General Funded Contracts

 

Description:

Imposes a general excise tax surcharge upon gross income or gross proceeds comprised of state non-general funds.  Imposes a public service company tax surcharge upon gross income comprised of state non-general funds.  Imposes an insurance premium tax surcharge upon gross premiums, gross underwriting profits, and risk premiums comprised of state non-general funds.  Takes effect on 7/1/2010 and sunsets on 6/30/2015.

 

 

 

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