HB 920

Report Title:

General Excise Tax; Exempt State and Counties

 

Description:

Exempts amounts received from the State and counties by sellers from the general excise tax.

 

 

HOUSE OF REPRESENTATIVES	H.B. NO.	920
TWENTY-FIRST LEGISLATURE, 2001
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO GENERAL EXCISE TAX.

 

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

SECTION 1. The legislature finds that the State of Hawaii and the counties pay a four per cent general excise tax on all their purchases passed on to them by sellers in Hawaii. The State is afforded the four per cent return of its moneys paid in that tax when the seller's general excise tax return is filed within the next few months.

By comparison, the counties do not regain the amounts paid out as general excise taxes passed on to them, therefore rendering the necessity of needing larger amounts of funding from the State to operate.

Should the State and counties prefer to make their purchases out of the State to escape the burden of the tax, they are then faced with shipping expenses to have the items brought to the islands. The local economy then becomes burdened with the loss of additional income and the outflux of our State's cash flow.

Both the State and the counties are facing financial difficulties. This Act will reduce the amounts paid out by the State and counties by exempting amounts received by sellers from them from the general excise tax.

Eliminating the general excise tax on amounts received by seller from the State and counties benefits more than the State's general fund. Local businesses and the local economy also benefit. The added benefits to the local economy stem from the fact that the State and the counties would be more apt to purchase their goods locally due to the cost reduction; thereby stimulating the local economy by awarding local merchants their business. This increases revenues for local businesses and increases revenues for the State's general fund through increased income tax collections. These types of purchases also keep Hawaii's cash flow within the State.

The legislature finds that this Act will assist in stimulating the local economy and in keeping the cash flow within the State. State funding to the counties will be reduced, allowing the State to either retain these funds in interest earning accounts or making more funding available to the State.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237-   General excise tax received from the State and the counties; exemption. All amounts received from any state department or agency or any county department or agency is exempt from the general excise tax as provided in this chapter."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2001.

INTRODUCED BY:	_____________________________