HB2149

Report Title:

General excise tax

Description:

Accelerates the de-pyramiding of the general excise tax on certain intermediary services.

HOUSE OF REPRESENTATIVES	H.B. NO.	2149
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

relating to the reduction of the general excise tax.

 

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

SECTION 1. The legislature finds that the events of September 11, 2001, contributed to a dramatic downturn in the tourist industry in this State. Forecasts from local economists predict a return to pre-September 11 tourist numbers no earlier than the end of 2002 or mid-2003. This dire situation highlights the need to diversify our economy, infuse external capital, and to support existing businesses. In order for a greater number of residents to enjoy prosperity, it has become increasingly evident that increased taxation is not the answer, especially after September 11. The answer to diversification and support of local business lies in an increase in revenues drawn from non-local sources. In other words, grow the size of the pie, not the slices.

One of the largest obstacles toward this goal is the regressive and business unfriendly general excise tax. This tax had long been cited as one of several reasons why Hawaii is considered unfriendly for business. This means non-local businesses of a type that government seeks to attract to our shores - high technology, telecommunications, and biotechnology, to name the most recent - are hesitant to invest capital here, create jobs, and pay salaries and wages to our residents precisely because of the general excise tax. This also means local businesses that export goods - such as produce, candies, crafts, clothes, music, and others - to non-local buyers are put at a comparative disadvantage due to higher fixed costs. In order to grow the pie for all, the de-pyramiding process started in 2000 must be accelerated. The purpose of this Act is to accelerate the de-pyramiding of the general excise tax.

SECTION 2. Section 237-13.3, Hawaii Revised Statutes, is amended to read as follows:

"§237-13.3 Application of sections 237-4(a)(8), 237-4(a)(10), 237-4(a)(13), 237-13(2)(A), 237-13(4)(A), and 237-13(6)(A). (a) Sections 237-4(a)(8), 237-4(a)(10), 237-4(a)(13), 237-13(2)(A), 237-13(4)(A), and 237-13(6)(A) to the contrary notwithstanding, instead of the tax levied under section 237-13(2)(A) on wholesale sales subject to section 237-4(a)(8)(B), under section 237-13(4)(A) on a wholesaler subject to section 237-4(a)(13), and under section 237-13(6)(A) on a wholesaler subject to section 237-4(a)(10) at one-half of one per cent, during the period January 1, 2000, to December 31, [2005] 2002, the tax shall be as follows:

(1) In calendar year 2000, 3.5 per cent;

(2) In calendar year 2001, 3.0 per cent;

(3) In calendar year 2002, 2.5 per cent; and

[(4) In calendar year 2003, 2.0 per cent;

(5) In calendar year 2004, 1.5 per cent;

(6) In calendar year 2005, 1.0 per cent; and

(7)] (4) In calendar year [2006] 2003 and thereafter, the tax shall be 0.5 per cent.

(b) The department shall have the authority to implement the tax rate changes in subsection (a) by prescribing tax forms and instructions that require tax reporting and payment by deduction, allocation, or any other method to determine tax liability with due regard to the tax rate changes."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2002.

 

 

 

 

INTRODUCED BY:	_____________________________