HB1914

Report Title:

Retail tax holiday

Description:

Allows the state to participate in a federal reimbursement program for state retail tax holidays.

HOUSE OF REPRESENTATIVES	H.B. NO.	1914
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO A RETAIL TAX HOLIDAY.

 

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

SECTION 1. The legislature finds that pending legislation in Congress would allow federal reimbursements to states for enacting a "retail tax" holiday. That is, the federal government would reimburse states for uncollected tax revenue during this holiday. The legislature also finds that the State should capitalize on this federal legislation when it passes the U.S. Congress and is signed into law. Tax holidays have been used successfully across the United States. For example, Texas lifted its 6.25 per cent state sales tax, along with all local sales taxes on clothing and footwear. New York and Florida already have similar programs.

More importantly, tax holidays have been found to create sales. Many Texas retailers have reported seeing crowds usually seen only during the Christmas selling season. To accommodate all of the shoppers, stores in Texas adopted extended hours, added staff, and offered special promotions usually reserved for holidays. While depressed sales might be expected after a tax holiday, retailers have not noticed fewer sales after a sales spike.

A tax holiday would have the effect of stimulating retail sales and giving a boost to our recovering economy. A general excise tax holiday in Hawaii would help both consumers and retailers alike. Enacting a tax holiday under pending federal legislation also has the added benefit of being revenue neutral to the State due to the reimbursement aspect, and a revenue maker if, as anecdotal evidence shows, sales increase during the holiday. The purpose of this Act is to allow the State the flexibility to take advantage of federal legislation regarding a tax holiday.

SECTION 2. If there is enacted federal legislation that authorizes a limited tax holiday provided a limited period, not extending beyond December 31, 2002, during which this State may suspend the collection of "sales" and "use" taxes, as defined in the same federal legislation, on particular transactions and for which suspended tax collections this State will be federally reimbursed, then the director of taxation is authorized to suspend the collection of taxes defined as "sales" and "use" taxes under such federal legislation on those transactions for that limited period. Notwithstanding any other law to the contrary, the director shall suspend collection of "sales" and "use" taxes, as defined in the same federal legislation, for the period of time, on those transactions, and to the extent necessary to qualify for the federal reimbursement.

SECTION 3. If the director of the department of budget and finance determines that federal funds are receivable or have been received that are available to pay for the administrative costs of this Act, then those federal monies as the director determines are appropriated and are regarded as immediately available for expenditure for those purposes.

SECTION 4. If the director of the department of budget and finance determines that those federal funds, if any, are insufficient for the administrative costs of this Act, there is appropriated out of the general revenues of the State of Hawaii the sum of $____________, or so much thereof as may be necessary for fiscal year 2002-2003, for the purpose of implementing this Act.

SECTION 5. This Act shall take effect upon its approval.

 

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