Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Third Special Session of 2001

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 5 entitled:

begs leave to report as follows:

The purpose of this measure is to counteract the negative impact that the September 11 terrorist attacks had on the national economy and on Hawaii's economy. Specifically, this bill will assist certain taxpayers by increasing the filing thresholds for withholding, general excise/use, transient accommodations, and rental motor vehicle and tour vehicle surcharge tax returns.

The Department of Taxation, the Department of Transportation, the Hawaii Tourism Authority, the Chamber of Commerce of Hawaii, and the American Resort Development Association, Hawaii chapter, supported the bill. The Tax Foundation of Hawaii submitted comments.

Your Committee finds that the recent terrorist attacks have reduced both business and leisure air travel, causing Hawaii's tourism-based economy to suffer heavily. Increasing the filing thresholds that determine when withholding, general excise/use, transient accommodations, and rental motor vehicle and tour vehicle surcharge tax payments are due allows taxpayers to make less frequent payments on their liability for these taxes. For example, employers now required to file withholding returns on a monthly basis may file quarterly returns if their liability does not exceed $5,000.

By allowing taxpayers to file certain tax returns less frequently, your Committee finds that this measure will encourage compliance in payment of withholding, general excise/use, transient accommodations, and rental motor vehicle and tour vehicle surcharge taxes and increase taxpayers' cash flow.

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 concurs with the intent and purpose of S.B. No. 5 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.