REPORT TITLE:
GE tax; applications


DESCRIPTION:
Clarifies GE tax rates for sales of bulk condiments or
single-serving packets; and sales of disposable nonreturnable
food containers.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1177
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE GENERAL EXCISE TAX. 


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

 1      SECTION 1.  Section 237-4, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§237-4  "Wholesaler", "jobber", defined.  "Wholesaler" or
 
 4 "jobber" applies only to a person making sales at wholesale.
 
 5 Only the following are sales at wholesale:
 
 6      (1)  Sales to a licensed retail merchant, jobber, or other
 
 7           licensed seller for purposes of resale;
 
 8      (2)  Sales to a licensed manufacturer of material or
 
 9           commodities which are to be incorporated by the
 
10           manufacturer into a finished or saleable product
 
11           (including the container or package in which the
 
12           product is contained) during the course of its
 
13           preservation, manufacture, or processing, including
 
14           preparation for market, and which will remain in such
 
15           finished or saleable product in such form as to be
 
16           perceptible to the senses, which finished or saleable
 
17           product is to be sold and not otherwise used by the
 
18           manufacturer;
 
19      (3)  Sales to a licensed producer or cooperative association
 

 
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 1           of materials or commodities which are to be
 
 2           incorporated by the producer or by the cooperative
 
 3           association into a finished or saleable product which
 
 4           is to be sold and not otherwise used by the producer or
 
 5           cooperative association, including specifically
 
 6           materials or commodities expended as essential to the
 
 7           planting, growth, nurturing, and production of
 
 8           commodities which are sold by the producer or by the
 
 9           cooperative association;
 
10      (4)  Sales to a licensed contractor, of material or
 
11           commodities which are to be incorporated by the
 
12           contractor into the finished work or project required
 
13           by the contract and which will remain in such finished
 
14           work or project in such form as to be perceptible to
 
15           the senses;
 
16      (5)  Sales to a licensed producer, or to a cooperative
 
17           association described in section 237-23(a)(7) for sale
 
18           to such producer, or to a licensed person operating a
 
19           feed lot, of poultry or animal feed, hatching eggs,
 
20           semen, replacement stock, breeding services for the
 
21           purpose of raising or producing animal or poultry
 
22           products for disposition as described in section 237-5
 
23           or to be incorporated in a manufactured product as
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           described in paragraph (2) or for the purpose of
 
 2           breeding, hatching, milking, or egg laying other than
 
 3           for the customer's own consumption of the meat,
 
 4           poultry, eggs, or milk so produced; provided that in
 
 5           the case of a feed lot operator, only the segregated
 
 6           cost of the feed furnished by the feed lot operator as
 
 7           part of the feed lot operator's service to a licensed
 
 8           producer of poultry or animals to be butchered or to a
 
 9           cooperative association described in section
 
10           237-23(a)(7) of such licensed producers shall be deemed
 
11           to be a sale at wholesale; and provided further that
 
12           any amount derived from the furnishing of feed lot
 
13           services, other than the segregated cost of feed, shall
 
14           be deemed taxable at the service business rate.  This
 
15           paragraph shall not apply to the sale of feed for
 
16           poultry or animals to be used for hauling,
 
17           transportation, or sports purposes;
 
18      (6)  Sales to a licensed producer, or to a cooperative
 
19           association described in section 237-23(a)(7) for sale
 
20           to the producer, of seed for producing agricultural
 
21           products, or bait for catching fish (including the
 
22           catching of bait for catching fish), which agricultural
 
23           products or fish are to be disposed of as described in
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           section 237-5 or to be incorporated in a manufactured
 
 2           product as described in paragraph (2);
 
 3      (7)  Sales to a licensed producer, or to a cooperative
 
 4           association described in section 237-23(a)(7) for sale
 
 5           to such producer; of polypropylene shade cloth; of
 
 6           polyfilm; of polyethylene film; of cartons and such
 
 7           other containers, wrappers, and sacks, and binders to
 
 8           be used for packaging eggs, vegetables, fruits, and
 
 9           other agricultural products; of seedlings and cuttings
 
10           for producing nursery plants; or of chick containers;
 
11           which cartons and such other containers, wrappers, and
 
12           sacks, binders, seedlings, cuttings, and containers are
 
13           to be used as described in section 237-5, or to be
 
14           incorporated in a manufactured product as described in
 
15           paragraph (2);
 
16      (8)  Sales of tangible personal property to a licensed
 
17           person engaged in the service business; provided that
 
18           (A) the property is not consumed or incidental to the
 
19           performance of the services; (B) there is a resale of
 
20           the article at the retail rate of four per cent; and
 
21           (C) the resale of the article is separately charged or
 
22           billed by the person rendering the services;
 
23      (9)  Sales to a licensed leasing company of capital goods
 

 
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 1           which are thereafter leased as a service to others.
 
 2           Capital goods means goods which have a depreciable life
 
 3           and which are purchased by the leasing company for
 
 4           lease to its customers[.];
 
 5     (10)  Sales to a licensed retail merchant, jobber, or other
 
 6           licensed seller of bulk condiments or prepackaged
 
 7           single-serving packets of condiments that are provided
 
 8           to customers by the licensed retail merchant, jobber,
 
 9           or other licensed seller;
 
10     (11)  Sales to a licensed retail merchant, jobber, or other
 
11           licensed seller of tangible personal property that will
 
12           be incorporated or processed by the licensed retail
 
13           merchant, jobber, or other licensed seller into a
 
14           finished or saleable product during the course of its
 
15           preparation for market (including disposable,
 
16           nonreturnable containers, packages, or wrappers, in
 
17           which the product is contained and that are generally
 
18           known and most commonly used to contain food or
 
19           beverage for transfer or delivery); and which finished
 
20           or saleable product is to be sold and not otherwise
 
21           used by the licensed retail merchant, jobber, or other
 
22           licensed seller.
 
23      If the use tax law is finally held by a court of competent
 

 
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 1 jurisdiction to be unconstitutional or invalid insofar as it
 
 2 purports to tax the use or consumption of tangible personal
 
 3 property imported into the State in interstate or foreign
 
 4 commerce or both, wholesalers and jobbers shall be taxed
 
 5 thereafter under this chapter in accordance with the following
 
 6 definition (which shall supersede the preceding paragraph
 
 7 otherwise defining "wholesaler" or "jobber"): "Wholesaler" or
 
 8 "jobber" means a person, or a definitely organized division
 
 9 thereof, definitely organized to render and rendering a general
 
10 distribution service which buys and maintains at the person's
 
11 place of business a stock or lines of merchandise which the
 
12 person distributes; and which, through salespersons, advertising,
 
13 or sales promotion devices, sells to licensed retailers, to
 
14 institutional or licensed commercial or industrial users, in
 
15 wholesale quantities and at wholesale rates.  A corporation
 
16 deemed not to be carrying on a trade or business in this State
 
17 under section 235-6 shall nevertheless be deemed to be a
 
18 wholesaler and shall be subject to the tax imposed by this
 
19 chapter."
 
20      SECTION 2.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 
22      SECTION 3.  This Act shall take effect upon its approval;
 
23 provided that section 1 shall apply to gross receipts received
 
24 after June 30, 1999.