STAND. COM. REP. NO. 2818

Honolulu, Hawaii

RE: S.B. No. 2020

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2020 entitled:

"A BILL FOR AN ACT RELATING TO THE GENERAL EXCISE TAX,"

begs leave to report as follows:

The purpose and intent of this measure is to clarify that sales to a licensed retail merchant, jobber, or other licensed seller for resale, and certain sales of tangible personal property, are only eligible for the wholesale tax rate if the resale will be subject to the highest general excise tax rate.

Your Committee received testimony in support of this measure from the Department of Taxation.

Your Committee received testimony in opposition to this measure from the Chamber of Commerce Hawaii, Hawaii Pacific Health, Queens Health System, and Walgreens.

Your Committee received comments on this measure from the Hawaii Health Systems Corporation, Tax Foundation of Hawaii, and Healthcare Association of Hawaii.

Your Committee recognizes that the wholesale rate for the general excise tax was adopted to relieve taxpayers from the pyramid effect of the tax. Your Committee notes the application of the wholesale rate contemplated that a subsequent sale taxed at the highest rate of tax would occur. Accordingly, your Committee believes that this measure will restore the intent behind the implementation of the wholesale rate and help ensure the orderly administration of taxes.

Your Committee has amended this measure by making the measure effective upon its approval.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2020, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2020, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair