Bill Text: HI SB1183 | 2018 | Regular Session | Amended
Bill Title: Relating To Taxation.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Engrossed - Dead) 2018-03-15 - Received notice of discharge of conferees (Hse. Com. No. 385). [SB1183 Detail]
Download: Hawaii-2018-SB1183-Amended.html
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THE SENATE |
S.B. NO. |
1183 |
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TWENTY-NINTH LEGISLATURE, 2017 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
PART I
SECTION 1. Section 46-16.8, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:
"(b) Each county that has established a
surcharge on state tax prior to [[]July 1, 2015,[]] under
authority of subsection (a) may extend the surcharge [from January 1, 2023,
until December 31, 2027,] in perpetuity at the same rates. A county
electing to extend this surcharge shall do so by ordinance; provided that[:
(1) No] no ordinance shall be
adopted until the county has conducted a public hearing on the proposed
ordinance[; and
(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015].
A county electing to exercise the authority
granted under this subsection shall notify the director of taxation within ten
days after the county has adopted an ordinance extending the surcharge on state
tax. [Beginning on January 1, 2023, the] The director of
taxation shall levy, assess, collect, and otherwise administer the extended
surcharge on state tax.
(c) Each county that has not established a
surcharge on state tax prior to [[July 1, 2015,]] July 1, 2017, may
establish the surcharge at the rates enumerated in sections 237-8.6 and
238-2.6. A county electing to establish this surcharge shall do so by
ordinance; provided that:
(1) No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance;
[(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015;] and
[(3)] (2) No county surcharge on state
tax that may be authorized under this subsection shall be levied prior to
January 1, 2018[, or after December 31, 2027].
A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted a surcharge on state tax ordinance. Beginning on January 1, 2018, the director of taxation shall levy, assess, collect, and otherwise administer the county surcharge on state tax."
SECTION 2. Section 248-2.6, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) If adopted by county ordinance, all
county surcharges on state tax collected by the director of taxation shall be
paid into the state treasury [quarterly,] monthly, within ten
working days after collection, and shall be placed by the director of finance
in special accounts. Out of the revenues generated by county surcharges on
state tax paid into each respective state treasury special account, the
director of finance shall deduct [ten per cent of] $
from the gross proceeds of a respective county's surcharge on state tax to
reimburse the [State] department of taxation for the costs
of assessment, collection, and disposition of the county surcharge on state tax
[to reimburse the State for the costs of assessment, collection, and
disposition of the county surcharge on state tax incurred by the State.
Amounts retained shall be general fund realizations of the State]."
2. By amending subsection (d) to read:
"(d) After the deduction and withholding
of the costs under subsections (a) and (b), the director of finance shall pay
the remaining balance on [[a] quarterly] a monthly basis to the
director of finance of each county that has adopted a county surcharge on state
tax under section 46-16.8. The [quarterly] monthly payments
shall be made after the county surcharges on state tax have been paid into the
state treasury special accounts or after the disposition of any tax appeal, as
the case may be. All county surcharges on state tax collected shall be
distributed by the director of finance to the county in which the county
surcharge on state tax is generated and shall be a general fund realization of
the county, to be used for the purposes specified in section 46-16.8 by each of
the counties."
SECTION 3. Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;
(2) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act; and
(3) If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:
(A) [The ordinance shall be repealed on
December 31, 2022; provided that the] The repeal of the ordinance
shall not affect the validity or effect of an ordinance to extend a surcharge
on state tax adopted pursuant to Act 134, Session Laws of Hawaii 2015;
[(B) This Act shall be repealed on
December 31, 2027;] and
[(C)] (B) Section 437D-8.4,
Hawaii Revised Statutes, shall be reenacted in the form in which it read on the
date prior to the effective date of this Act; provided that the amendments made
to section 437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of
Hawaii 2008, as amended by Act 11, Session Laws of Hawaii 2009, and Act 110,
Session Laws of Hawaii 2014, shall not be repealed."
PART II
SECTION 4. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Low-income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a tax credit to reduce the state income tax liability for low-income taxpayers. After completing the income tax calculations required by this chapter:
(1) A taxpayer with a federal adjusted gross income below the federal poverty guidelines and with a state income tax liability shall receive a credit that reduces the taxpayer's state income tax liability by per cent;
(2) A taxpayer with a federal adjusted gross income of at least one hundred but not more than one hundred twenty-five per cent of the federal poverty guidelines and with a state income tax liability shall receive a credit that reduces the taxpayer's state income tax liability by per cent; and
(3) A taxpayer with a federal adjusted gross income above one hundred twenty-five per cent of the federal poverty guidelines shall be ineligible for the credit.
(b) All claims for a tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.
(c) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for the tax credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(d) For purposes of this section, "federal poverty guidelines" means the guidelines set forth by the United States Department of Health and Human Services each year for Hawaii."
SECTION 5. Section 46-16.8, Hawaii Revised Statutes, is amended to read as follows:
"§46-16.8 County surcharge on state
tax. (a) Each county [may], by July 1, 2018, may establish
a surcharge on state tax at the rates enumerated in sections 237-8.6 and
238-2.6. A county [electing to] shall establish this surcharge [shall
do so] by ordinance; provided that[:
(1) No] no ordinance shall be
adopted until the county has conducted a public hearing on the proposed
ordinance[;
(2) The ordinance shall be adopted prior to
December 31, 2005; and
(3) No county surcharge on state tax that
may be authorized under this subsection shall be levied prior to January 1,
2007, or after December 31, 2022, unless extended pursuant to subsection (b)].
Notice of the public hearing required under [paragraph
(1)] this subsection shall be published in a newspaper of general
circulation within the county at least twice within a period of thirty days
immediately preceding the date of the hearing.
(b) A county [electing to exercise
the authority granted under this subsection] shall notify the director of
taxation within ten days after the county has adopted a surcharge on state tax
ordinance [and, beginning no earlier than January 1, 2007, the]. The
director of taxation shall levy, assess, collect, and otherwise administer the
county surcharge on state tax[.]; provided that for any ordinance
that is adopted after July 1, 2017, pursuant to this section, the director of
taxation shall not levy, assess, collect, or otherwise administer the county
surcharge on state tax earlier than January 1 of the year succeeding the
adoption of the authorizing ordinance.
[(b) Each county that has established a
surcharge on state tax prior to [July 1, 2015,] under authority of subsection
(a) may extend the surcharge from January 1, 2023, until December 31, 2027, at
the same rates. A county electing to extend this surcharge shall do so by
ordinance; provided that:
(1) No ordinance shall be adopted until the
county has conducted a public hearing on the proposed ordinance; and
(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015.
A county electing to exercise the authority
granted under this subsection shall notify the director of taxation within ten
days after the county has adopted an ordinance extending the surcharge on state
tax. Beginning on January 1, 2023, the director of taxation shall levy,
assess, collect, and otherwise administer the extended surcharge on state tax.
(c) Each county that has not established a
surcharge on state tax prior to [July 1, 2015,] may establish the surcharge at
the rates enumerated in sections 237-8.6 and 238-2.6. A county electing to
establish this surcharge shall do so by ordinance; provided that:
(1) No ordinance shall be adopted until the
county has conducted a public hearing on the proposed ordinance;
(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015; and
(3) No county surcharge on state tax that
may be authorized under this subsection shall be levied prior to January 1,
2018, or after December 31, 2027.
A county electing to exercise the authority
granted under this subsection shall notify the director of taxation within ten
days after the county has adopted a surcharge on state tax ordinance.
Beginning on January 1, 2018, the director of taxation shall levy, assess,
collect, and otherwise administer the county surcharge on state tax.
(d) Notice of the public hearing required
under subsection (b) or (c) before adoption of an ordinance establishing or
extending the surcharge on state tax shall be published in a newspaper of
general circulation within the county at least twice within a period of thirty
days immediately preceding the date of the hearing.]
[(e)] (c) Each county with a
population greater than five hundred thousand that adopts [or extends] a
county surcharge on state tax ordinance pursuant to subsection (a) [or (b)]
shall use the surcharges received from the State for:
(1) Capital costs of a locally preferred alternative for a mass transit project; and
(2) Expenses in complying with the Americans with Disabilities Act of 1990 with respect to paragraph (1).
The county surcharge on state tax shall not be used to build or repair public roads or highways, bicycle paths, or support public transportation systems already in existence prior to July 12, 2005.
[(f)] (d) Each county with a
population equal to or less than five hundred thousand that adopts a county
surcharge on state tax ordinance pursuant to this section shall use the
surcharges received from the State for:
(1) Operating or capital costs of public transportation within each county for public transportation systems, including public roadways or highways, public buses, trains, ferries, pedestrian paths or sidewalks, or bicycle paths; and
(2) Expenses in complying with the Americans with Disabilities Act of 1990 with respect to paragraph (1).
[(g)] (e) As used in this
section, "capital costs" means nonrecurring costs required to
construct a transit facility or system, including debt service, costs of land
acquisition and development, acquiring of rights-of-way, planning, design, and
construction, and including equipping and furnishing the facility or system.
For a county with a population greater than five hundred thousand, capital
costs also include non-recurring personal services and other overhead costs
that are not intended to continue after completion of construction of the
minimum operable segment of the locally preferred alternative for a mass transit
project."
SECTION 6. Section 237-8.6, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) The county surcharge on state tax,
upon the adoption of county ordinances and in accordance with the requirements
of section 46-16.8, shall be levied, assessed, and collected as provided in
this section on all gross proceeds and gross income taxable under this
chapter. [No county shall set the] The county surcharge on state
tax shall be set at a rate [greater than] equal to
one-half per cent of all gross proceeds and gross income taxable under this
chapter. All provisions of this chapter shall apply to the county surcharge on
state tax. With respect to the surcharge, the director of taxation shall have
all the rights and powers provided under this chapter. In addition, the
director of taxation shall have the exclusive rights and power to determine the
county or counties in which a person is engaged in business and, in the case of
a person engaged in business in more than one county, the director shall
determine, through apportionment or other means, that portion of the surcharge
on state tax attributable to business conducted in each county.
(b) Each county surcharge on state tax that [may
be] is adopted [or extended] pursuant to section 46-16.8
shall be levied beginning in the taxable year after the adoption of the
relevant county ordinance[; provided that no surcharge on state tax may be
levied:
(1) Prior to:
(A) January 1, 2007, if the county
surcharge on state tax was established by an ordinance adopted prior to
December 31, 2005; or
(B) January 1, 2018, if the county
surcharge on state tax was established by the adoption of an ordinance after June
30, 2015, but prior to July 1, 2016; and
(2) After December 31, 2027].
(c) The county surcharge on state tax, [if
adopted,] upon adoption, shall be imposed on the gross proceeds or
gross income of all written contracts that require the passing on of the taxes
imposed under this chapter; provided that if the gross proceeds or gross income
are received as payments beginning in the taxable year in which the taxes
become effective, on contracts entered into before June 30 of the year prior to
the taxable year in which the taxes become effective, and the written contracts
do not provide for the passing on of increased rates of taxes, the county
surcharge on state tax shall not be imposed on the gross proceeds or gross
income covered under the written contracts. The county surcharge on state tax
shall be imposed on the gross proceeds or gross income from all contracts
entered into on or after June 30 of the year prior to the taxable year in which
the taxes become effective, regardless of whether the contract allows for the
passing on of any tax or any tax increases."
SECTION 7. Section 238-2.6, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) The county surcharge on state tax,
upon the adoption of a county ordinance and in accordance with the requirements
of section 46-16.8, shall be levied, assessed, and collected as provided in
this section on the value of property and services taxable under this chapter.
[No county shall set the] The county surcharge on state tax shall
be set at a rate [greater than] equal to one-half per cent of
the value of property taxable under this chapter. All provisions of this
chapter shall apply to the county surcharge on state tax. With respect to the
surcharge, the director shall have all the rights and powers provided under
this chapter. In addition, the director of taxation shall have the exclusive
rights and power to determine the county or counties in which a person imports
or purchases tangible personal property and, in the case of a person importing
or purchasing tangible property in more than one county, the director shall
determine, through apportionment or other means, that portion of the surcharge
on state tax attributable to the importation or purchase in each county.
(b) Each county surcharge on state tax that [may
be] is adopted [or extended] shall be levied beginning in the
taxable year after the adoption of the relevant county ordinance[; provided
that no surcharge on state tax may be levied:
(1) Prior to:
(A) January 1, 2007, if the county
surcharge on state tax was established by an ordinance adopted prior to
December 31, 2005; or
(B) January 1, 2018, if the county
surcharge on state tax was established by the adoption of an ordinance after
June 30, 2015, but prior to July 1, 2016; and
(2) After December 31, 2027]."
SECTION 8. Section 248-2.6, Hawaii Revised Statutes, is amended to read as follows:
"[[]§248-2.6[]]
County surcharge on state tax; disposition of proceeds. (a) [If
adopted by county ordinance, all] All county surcharges on state tax
collected by the director of taxation shall be paid into the state treasury [quarterly,]
monthly, within ten working days after collection, and shall be placed
by the director of finance in special accounts. Out of the revenues generated
by county surcharges on state tax paid into each respective state treasury
special account, the director of finance shall deduct [ten]
per cent of the gross proceeds of a respective county's surcharge on state tax [to
reimburse the State for the costs of assessment, collection, and disposition of
the county surcharge on state tax incurred by the State. Amounts retained
shall be general fund realizations of the State.] for deposit into the
state highway fund created by section 248-8.
(b) The amounts deducted [for costs of
assessment, collection, and disposition of county surcharges on state tax] pursuant
to subsection (a) shall be withheld from payment to the counties by the
State out of the county surcharges on state tax collected for the current
calendar year.
[(c) For the purpose of this section, the
costs of assessment, collection, and disposition of the county surcharges on
state tax shall include any and all costs, direct or indirect, that are deemed
necessary and proper to effectively administer this section and sections
237-8.6 and 238-2.6.
(d)] (c) After the deduction and
withholding of the [costs] amounts under subsections (a) and (b),
the director of finance shall pay the remaining balance on [[a] quarterly]
a monthly basis to the director of finance of each county that has
adopted a county surcharge on state tax under section 46-16.8. The [quarterly]
monthly payments shall be made after the county surcharges on state tax
have been paid into the state treasury special accounts or after the
disposition of any tax appeal, as the case may be.
[All] Prior to July 1, 2018, all
county surcharges on state tax revenues collected shall be distributed
by the director of finance to the county in which the county surcharge on state
tax is generated and shall be a general fund realization of the county, to be
used for the purposes specified in section 46-16.8 by each of the counties. Beginning
July 1, 2018, after the deduction of gross proceeds authorized pursuant to
subsection (a), all remaining county surcharge on state tax revenues collected
shall be distributed by the director of finance and allocated as follows:
(1) The county of Kauai shall receive per cent;
(2) The county of Hawaii shall receive per cent;
(3) The city and county of Honolulu shall receive per cent; and
(4) The county of Maui shall receive per cent;
provided that if the county surcharge on state tax has not been adopted by all counties, all remaining surcharge on state tax revenues due to the counties shall be allocated among those counties that have adopted the county surcharge on state tax according to the percentages established in paragraphs (1) to (4). These distributions shall be general fund realizations of the counties, to be used for the purposes specified in section 46-16.8 by each of the counties."
SECTION 9. Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:
"SECTION 9. This Act shall take effect
upon its approval[; provided that:
(1) If none of the counties of the State
adopt an ordinance to levy a county surcharge on state tax by December 31,
2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes,
shall be reenacted in the form in which it read on the day prior to the
effective date of this Act;
(2) If any county does not adopt an
ordinance to levy a county surcharge on state tax by December 31, 2005, it
shall be prohibited from adopting such an ordinance pursuant to this Act,
unless otherwise authorized by the legislature through a separate legislative
act; and
(3) If an ordinance to levy a county
surcharge on state tax is adopted by December 31, 2005:
(A) The ordinance shall be repealed
on December 31, 2022; provided that the repeal of the ordinance shall not
affect the validity or effect of an ordinance to extend a surcharge on state
tax adopted pursuant to Act 240, Session Laws of Hawaii 2015;
(B) This Act shall be repealed on
December 31, 2027; and
(C) Section 437D-8.4, Hawaii Revised
Statutes, shall be reenacted in the form in which it read on the day prior to
the effective date of this Act; provided that the amendments made to section
437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of Hawaii 2008, as
amended by Act 11, Session Laws of Hawaii 2009, and Act 110, Session Laws of
Hawaii 2014, shall not be repealed]."
PART III
SECTION 10. Section 46-16.8, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:
"(b) Each county that has established a
surcharge on state tax prior to [[]July 1, 2015,[]] under
authority of subsection (a) may extend the surcharge from January 1, 2023,
until December 31, [2027,] 2032, at the same rates. A county
electing to extend this surcharge shall do so by ordinance; provided that[:
(1) No] no ordinance shall be
adopted until the county has conducted a public hearing on the proposed
ordinance[; and
(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015].
A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted an ordinance extending the surcharge on state tax. Beginning on January 1, 2023, the director of taxation shall levy, assess, collect, and otherwise administer the extended surcharge on state tax.
(c) Each county that has not established a
surcharge on state tax prior to [[]July 1, [2015,]] 2017, may
establish the surcharge at the rates enumerated in sections 237-8.6 and 238‑2.6.
A county electing to establish this surcharge shall do so by ordinance;
provided that:
(1) No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance;
[(2) The ordinance shall be adopted prior to
July 1, 2016, but no earlier than July 1, 2015;] and
[(3)] (2) No county surcharge on state
tax that may be authorized under this subsection shall be levied prior to
January 1, 2018, or after December 31, [2027.] 2032.
A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted a surcharge on state tax ordinance. Beginning on January 1, 2018, the director of taxation shall levy, assess, collect, and otherwise administer the county surcharge on state tax."
SECTION 11. Section 248-2.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) If adopted by county ordinance, all
county surcharges on state tax collected by the director of taxation shall be
paid into the state treasury quarterly, within ten working days after
collection, and shall be placed by the director of finance in special
accounts. Out of the revenues generated by county surcharges on state tax paid
into each respective state treasury special account, the director of finance
shall deduct ten per cent of the gross proceeds of a respective county's
surcharge on state tax [to reimburse the State for the costs of assessment,
collection, and disposition of the county surcharge on state tax incurred by
the State. Amounts]; provided that per
cent of the amounts retained shall be [general fund realizations of the
State.] used by the department of transportation for transit oriented
development and infrastructure improvement purposes."
SECTION 12. Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;
(2) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act; and
(3) If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:
(A) The ordinance shall be repealed on
December 31, [2022;] 2032; provided that the repeal of the
ordinance shall not affect the validity or effect of an ordinance to extend a
surcharge on state tax adopted pursuant to Act 134, Session Laws of Hawaii
2015;
(B) This Act shall be repealed on December 31,
[2027;] 2032; and
(C) Section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the date prior to the effective date of this Act; provided that the amendments made to section 437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of Hawaii 2008, as amended by Act 11, Session Laws of Hawaii 2009, and Act 110, Session Laws of Hawaii 2014, shall not be repealed."
SECTION 13. No later than December 31, 2027, the following parcels shall be transferred from the Hawaii community development authority to the city and county of Honolulu:
(1) A portion of South and Pohukaina streets, improvement district 1, parcel 5, identified as a 6,806 square foot parcel, TMK No. 2-1-29:06, with an appraised value of $100;
(2) A portion of South street, improvement district 1, parcel 1, identified as a 1,595 square foot parcel, TMK No. 2-1-29:07, with an appraised value of $100;
(3) Portions of South and Halekauwila streets, improvement district 1, parcels 7, 8, 9, and 10, identified as a 640 square foot parcel, TMK No. 2-1-30:46, with an appraised value of $100;
(4) A portion of Pohukaina street, improvement district 1, parcel 11, improvement district 2 parcels 1, 2, and 3, identified as a 4,380 square foot parcel, TMK No. 2-1-30:47, with an appraised value of $100;
(5) A portion of South street, improvement district 1, parcels 12, and 13, identified as a 758 square foot parcel, TMK No. 2-1-30:48, with an appraised value of $100;
(6) Portions of South and Pohukaina streets, improvement district 1, parcel 6, identified as a 4,586 square foot parcel, TMK No. 2-1-30:49, with an appraised value of $100;
(7) A portion of Halekauwila street, improvement district 1, parcel 14, identified as a 23 square foot parcel, TMK No. 2-1-31:37, with an appraised value of $100;
(8) A portion of South street, improvement district 1, parcels 18, 19, 20 and 21, identified as a 5,095 square foot parcel, TMK No. 2-1-31:38, with an appraised value of $100;
(9) Portions of Queen and South streets, improvement district 1, parcels 15, 16, 17, 26, 27, 29, and 30, identified as a 9,761 square foot parcel, TMK No. 2-1-32:25, with an appraised value of $100;
(10) A portion of South street, improvement district 1, parcel 28, identified as a 1,450 square foot parcel, TMK No. 2-1-47:09, with an appraised value of $100;
(11) Portions of Cooke and Kawaiahao streets, improvement district 1, parcels 31, 32, 33, 34, 35, 37, 38, 39, 40, and improvement district 3, parcels 10 and 11, identified as a 27,598 square foot parcel, TMK No. 2‑1-48:20, with an appraised value of $3,000;
(12) A portion of South street, improvement district 1, parcels 22, 23, 24 and 25, identified as a 5,049 square foot parcel, TMK No. 2-1-48:21, with an appraised value of $100;
(13) The corner of Cooke and Kawaiahao streets, improvement district 3, parcel 13, identified as an 86 square foot parcel, TMK No. 2-1-49:51, with an appraised value of $100;
(14) A portion of Queen street, improvement district 3, parcel 16, identified as a 286 square foot parcel, TMK No. 2-1-49:81, with an appraised value of $100;
(15) The corner of Cooke street and Kapiolani boulevard, improvement district 3, parcel 12, identified as a 155 square foot parcel, TMK No. 2-1-49:83, with an appraised value of $100;
(16) The corner of Cooke and Ilaniwai streets improvement district 3, parcel 19, identified as an 86 square foot parcel, TMK No. 2-1-50:66, with an appraised value of $100;
(17) A portion of Halekauwila street, improvement district 3, parcels 22A, 22D, 23A, 23B, 24A, 24B, 25A, identified as an 18,614 square foot parcel, TMK No. 2‑1-50: a portion of 67, with an appraised value of $3,600;
(18) A portion of Cooke street, improvement district 3, parcels 21A and 21B, identified as a 235 square foot parcel, TMK No. 2-1-50:69, with an appraised value of $100;
(19) The corner of Cooke and Queen streets, improvement district 3, parcel 18, identified as an 86 square foot parcel, TMK No. 2-1-50: a portion of Cooke and Queen streets, with an appraised value of $100;
(20) A portion of Cooke and Pohukaina streets, improvement district 2, parcel 7, and improvement district 3, parcels 1A, 1B, 1C, 2, and 3, identified as an 11,646 square foot parcel, TMK No. 2-1-51: a portion of 03, with an appraised value of $1,300;
(21) A portion of Cooke street, improvement district 3, parcel 8, identified as a 750 square foot parcel, TMK No. 2-1-51: a portion of 14, with an appraised value of $100;
(22) Portions of Halekauwila and Cooke streets, improvement district 3, parcel 4A, identified as a 7,207 square foot parcel, TMK No. 2-1-51: a portion of 19, with an appraised value of $200;
(23) A portion of Coral street, improvement district 1, parcel 36, identified as an 82 square foot parcel, TMK No. 2-1-51:34, with an appraised value of $100;
(24) A portion of Cooke street, improvement district 3, parcel 9, identified as an 836 square foot parcel, TMK No. 2-1-51:36, with an appraised value of $100;
(25) A portion of Cooke street, improvement district 3, parcel 7, identified as a 1,628 square foot parcel, TMK No. 2-1-51:37, with an appraised value of 100;
(26) A portion of Pohukaina street, improvement district 2, parcel 4, identified as a 7,000 square foot parcel, TMK No. 2-1-51:40, with an appraised value of $100;
(27) A portion of Pohukaina street, improvement district 2, parcel 6, identified as a 160 square foot parcel, TMK No. 2-1-51: portion of Lana lane, with an appraised value of $100;
(28) Portions of Halekauwila street and Lana lane, improvement district 3, parcels 5A, identified as a 400 square foot parcel, TMK No. 2-1-51: portion of Lana lane and Halekauwila street, with an appraised value of $100;
(29) A portion of Halekauwila street, identified as a 37,261 square foot parcel, TMK No. 2-1-52: a portion of 22, with an appraised value of $4,300;
(30) A portion of Cooke street, improvement district 2, parcel 8, and improvement district 3, parcels 26A, 26B and 27, identified as a 1,520 square foot parcel, TMK No. 2-1-52:55, with an appraised value of $100;
(31) A portion of Cooke street, improvement district 2, parcel 16, identified as a 4,892 square foot parcel, TMK No. 2-1-53:31, with an appraised value of $100;
(32) A portion of South and Auahi streets, improvement district 1, parcels 3, identified as an 86 square foot parcel, TMK No. 2-1-54:34, with an appraised value of $100;
(33) A portion of South and Pohukaina streets, improvement district 1, parcel 4, identified as an 86 square foot parcel, TMK No. 2-1-54:35, with an appraised value of $100;
(34) A portion of Cooke street, improvement district 2, parcel 14, identified as a 707 square foot parcel, TMK No. 2-1-54:36, with an appraised value of $100;
(35) A portion of South and Auahi streets, improvement district 1, parcel 2, identified as an 86 square foot parcel, TMK No. 2-1-55:39, with an appraised value of $100;
(36) A portion of Cooke street, improvement district 2, parcels 9, 10, 11, 12, and 13, identified as a 512 square foot parcel, TMK No. 2-1-55:40, with an appraised value of $100;
(37) A portion of Cooke street, improvement district 2, parcel 15, identified as a 3,189 square foot parcel, TMK No. 2-1-56:12, with an appraised value of $100;
(38) A portion of Ahui street, improvement district 12, parcel 10, identified as an 18,818 square foot parcel, TMK No. 2-1-58: portion of Ahui street, with an appraised value of $2,600;
(39) Portions of Ohe, Olomehani, and Ahui streets, improvement district 12, parcel 11, identified as a 3.248 acre parcel, TMK No. 2-1-60: portions of 4, 6, and Ahui street, with an appraised value of $6,400;
(40) A portion of Kamakee street, improvement district 4, parcel 1, 2, 3, 4, 8, 9, 10, 11, 17, 18, 21, 22, 23, lot 239-B, identified as an 11,649 square foot parcel, TMK No. 2-3-03:103, with an appraised value of $100;
(41) A portion of Queen street at Kamakee street, identified as an approximately 26,826 square foot parcel, TMK No. 2-3-03:87, with an appraised value of $800;
(42) A portion of Kamakee and Queen streets, improvement district 4, parcels 5 and 6, and improvement district 10, lots 454 and 456, LCA 670, map 46, identified as a 3,431 square foot parcel, TMK No. 2-3-04: a portion of 29, with an appraised value of $100;
(43) A portion of Kamakee street, improvement district 4, parcels 19, 20, 24, and 25, identified as an 8,075 square foot parcel, TMK No. 2-3-04:74, with an appraised value of $100;
(44) A portion of Waimanu street, improvement district 10, lot 30A, LCA 948, map 8, improvement district 10, lot 31B, LCA 948, map 9, improvement district 10, lot 1B, LCC 53, map 22, identified as a 20,686 square foot parcel, TMK No. 2-3-04: portion of 80, with an appraised value of $100;
(45) A portion of Queen street, improvement district 10, lot 4, LCC 188, map 3, identified as a 44,385 square foot parcel, TMK Nos. 2-3-04: portion of 80 and 2-3-06: portion of 14, with an appraised value of $900;
(46) A portion of Kamakee street, improvement district 4, parcel 13, identified as a 910 square foot parcel, TMK No. 2-3-04: portion of Kamakee street, with an appraised value of $100;
(47) A portion of Kamakee street, improvement district 4, parcel 14, identified as an 892 square foot parcel, TMK No. 2-3-04: portion of Kamakee street, with an appraised value of $100;
(48) A portion of Kamakee street, improvement district 4, parcels 15, and 16, identified as a 1,784 square foot parcel, TMK No. 2-3-04: portion of Kamakee street, with an appraised value of $100;
(49) A portion of Kawaiahao street, improvement district 4, parcel 7, identified as a 710 square foot parcel, TMK No. 2-3-04: portion of Kawaiahao street, with an appraised value of $100;
(50) A portion of Waimanu street, identified as a 9,507 square foot parcel, TMK No. 2-3-06:16, with an appraised value of $100;
(51) A portion of Waimanu street, improvement district 10 lot 915-B-2, LCA 880, map 132, and improvement district 10 lot 30-B-2, LCA 948, map 10, identified as a 3,160 square foot parcel, TMK No. 2-3-06: portion of 14, with an appraised value of $100;
(52) A portion of Waimanu street, improvement district 10 lot 915-C, LCA 880, map 131, and improvement district 10 lot 1-B, LCC 194, map 2, identified as a 9,194 square foot parcel, TMK No. 2-3-06: portion of 15, with an appraised value of $100; and
(53) The corner of Waimanu and Pensacola streets, improvement district 10 lot 885-a, LCA 880, map 136, identified as an 86 square foot parcel, TMK No. 2-3-07: portion of Waimanu and Pensacola streets, with an appraised value of $100.
SECTION 14. No later than December 31, 2027, the city and county of Honolulu shall:
(1) Create a bus rapid transit lane connecting central Oahu to the Pearl highlands station;
(2) Create a secondary access road into leeward community college;
(3) Expedite permitting for infrastructure improvements related to rapid transportation projects; and
(4) Upzone all state-owned lands along the rail corridor.
SECTION 15. No later than December 31, 2027, the city and county of Honolulu shall:
(1) Notwithstanding chapter 343, Hawaii Revised Statutes, expedite any environmental impact statement and environmental assessment, as appropriate, for widening of Farrington highway from Kapolei golf course to Fort Weaver road;
(2) Transfer to the State all land owned by the city and county of Honolulu upon which the department of education has a department school or facility;
(3) Expedite planning and design for increased infrastructure, including water, sewer, drain, and roadways, in Iwilei-Kapalama, Halawa/Aloha Stadium, and West Oahu;
(4) Accept the dedication of roads, sidewalk trees, drainage catch basins, and other improvements within the road lots within or adjacent to the Village of Kapolei from the Hawaii housing finance and development corporation upon payment of $15,000,000 by the corporation;
(5) Accept all roads and streets in which there is an ownership dispute between the city and county of Honolulu, the State, and/or private landowners;
(6) Expedite the identification of alternatives to relocate electrical lines along Dillingham boulevard with the least impact to state lands;
(7) Add capacity to the sewer in Kapalama canal to allow the Hawaii community college science building to hook up to the city and county sewer line;
(8) Notwithstanding any law to the contrary, allow the State to design projects on state-owned land within a one-half mile radius of any rail station; and
(9) Complete the lifting of city and county of Honolulu covenants relating to Aloha Stadium by September 30, 2017.
PART IV
SECTION 16. The legislature finds that one county has adopted a surcharge on state tax to help pay for capital costs of a locally-preferred alternative to mass transit project. However, the project is facing a budgetary shortfall and continues to be plagued with rising costs.
The legislature further finds that the State is facing an increase in its educational, transportation, affordable housing, and elderly care needs. Additional revenues are needed to support these critical areas.
The purpose of this part is to increase the general excise tax and use tax by one-half per cent, with an unspecified portion of the additional revenues generated by the increase to be transferred to a county that has adopted a surcharge on state tax on a temporary basis and to be partially matched by the applicable county, with the remainder of the additional revenues being used to support the State's education, transportation, affordable housing, and elderly care needs. This part also repeals the counties' authority to levy a surcharge on state tax on January 1, 2019. It is the legislature's intent that the repeal of the county surcharge, coupled with the increase in the general excise tax and use tax will even the disparity in generating tax revenues for the State across all counties.
SECTION 17. Section 237-13, Hawaii Revised Statutes, is amended to read as follows:
"§237-13 Imposition of tax. There is hereby levied and shall be assessed and collected annually privilege taxes against persons on account of their business and other activities in the State measured by the application of rates against values of products, gross proceeds of sales, or gross income, whichever is specified, as follows:
(1) Tax on manufacturers.
(A) Upon every person engaging or continuing within the State in the business of manufacturing, including compounding, canning, preserving, packing, printing, publishing, milling, processing, refining, or preparing for sale, profit, or commercial use, either directly or through the activity of others, in whole or in part, any article or articles, substance or substances, commodity or commodities, the amount of the tax to be equal to the value of the articles, substances, or commodities, manufactured, compounded, canned, preserved, packed, printed, milled, processed, refined, or prepared for sale, as shown by the gross proceeds derived from the sale thereof by the manufacturer or person compounding, preparing, or printing them, multiplied by one-half of one per cent.
(B) The measure of the tax on manufacturers is the value of the entire product for sale, regardless of the place of sale or the fact that deliveries may be made to points outside the State.
(C) If any person liable for the tax on manufacturers ships or transports the person's product, or any part thereof, out of the State, whether in a finished or unfinished condition, or sells the same for delivery to points outside the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), the value of the products in the condition or form in which they exist immediately before entering interstate or foreign commerce, determined as hereinafter provided, shall be the basis for the assessment of the tax imposed by this paragraph. This tax shall be due and payable as of the date of entry of the products into interstate or foreign commerce, whether the products are then sold or not. The department shall determine the basis for assessment, as provided by this paragraph, as follows:
(i) If the products at the time of their entry into interstate or foreign commerce already have been sold, the gross proceeds of sale, less the transportation expenses, if any, incurred in realizing the gross proceeds for transportation from the time of entry of the products into interstate or foreign commerce, including insurance and storage in transit, shall be the measure of the value of the products;
(ii) If the products have not been sold at the time of their entry into interstate or foreign commerce, and in cases governed by clause (i) in which the products are sold under circumstances such that the gross proceeds of sale are not indicative of the true value of the products, the value of the products constituting the basis for assessment shall correspond as nearly as possible to the gross proceeds of sales for delivery outside the State, adjusted as provided in clause (i), or if sufficient data are not available, sales in the State, of similar products of like quality and character and in similar quantities, made by the taxpayer (unless not indicative of the true value) or by others. Sales outside the State, adjusted as provided in clause (i), may be considered when they constitute the best available data. The department shall prescribe uniform and equitable rules for ascertaining the values;
(iii) At the election of the taxpayer and with the approval of the department, the taxpayer may make the taxpayer's returns under clause (i) even though the products have not been sold at the time of their entry into interstate or foreign commerce; and
(iv) In all cases in which products leave the State in an unfinished condition, the basis for assessment shall be adjusted so as to deduct the portion of the value as is attributable to the finishing of the goods outside the State.
(2) Tax on business of selling tangible personal property; producing.
(A) Upon every person engaging or continuing in the business of selling any tangible personal property whatsoever (not including, however, bonds or other evidence of indebtedness, or stocks), there is likewise hereby levied, and shall be assessed and collected, a tax equivalent to four and one-half per cent of the gross proceeds of sales of the business; provided that, in the case of a wholesaler, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business; and provided further that insofar as the sale of tangible personal property is a wholesale sale under section 237-4(a)(8), the tax shall be one-half of one per cent of the gross proceeds. Upon every person engaging or continuing within this State in the business of a producer, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business, or the value of the products, for sale, if sold for delivery outside the State or shipped or transported out of the State, and the value of the products shall be determined in the same manner as the value of manufactured products covered in the cases under paragraph (1)(C).
(B) Gross proceeds of sales of tangible property in interstate and foreign commerce shall constitute a part of the measure of the tax imposed on persons in the business of selling tangible personal property, to the extent, under the conditions, and in accordance with the provisions of the Constitution of the United States and the Acts of the Congress of the United States which may be now in force or may be hereafter adopted, and whenever there occurs in the State an activity to which, under the Constitution and Acts of Congress, there may be attributed gross proceeds of sales, the gross proceeds shall be so attributed.
(C) No manufacturer or producer, engaged in such business in the State and selling the manufacturer's or producer's products for delivery outside of the State (for example, consigned to a mainland purchaser via common carrier f.o.b. Honolulu), shall be required to pay the tax imposed in this chapter for the privilege of so selling the products, and the value or gross proceeds of sales of the products shall be included only in determining the measure of the tax imposed upon the manufacturer or producer.
(D) When a manufacturer or producer, engaged in such business in the State, also is engaged in selling the manufacturer's or producer's products in the State at wholesale, retail, or in any other manner, the tax for the privilege of engaging in the business of selling the products in the State shall apply to the manufacturer or producer as well as the tax for the privilege of manufacturing or producing in the State, and the manufacturer or producer shall make the returns of the gross proceeds of the wholesale, retail, or other sales required for the privilege of selling in the State, as well as making the returns of the value or gross proceeds of sales of the products required for the privilege of manufacturing or producing in the State. The manufacturer or producer shall pay the tax imposed in this chapter for the privilege of selling its products in the State, and the value or gross proceeds of sales of the products, thus subjected to tax, may be deducted insofar as duplicated as to the same products by the measure of the tax upon the manufacturer or producer for the privilege of manufacturing or producing in the State; provided that no producer of agricultural products who sells the products to a purchaser who will process the products outside the State shall be required to pay the tax imposed in this chapter for the privilege of producing or selling those products.
(E) A taxpayer selling to a federal cost-plus contractor may make the election provided for by paragraph (3)(C), and in that case the tax shall be computed pursuant to the election, notwithstanding this paragraph or paragraph (1) to the contrary.
(F) The department, by rule, may require that a seller take from the purchaser of tangible personal property a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:
(i) Any purchaser who furnishes a certificate shall be obligated to pay to the seller, upon demand, the amount of the additional tax that is imposed upon the seller whenever the sale in fact is not at wholesale; and
(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the sales of the business are exclusively at wholesale.
(3) Tax upon contractors.
(A) Upon every person engaging or continuing within the State in the business of contracting, the tax shall be equal to four and one-half per cent of the gross income of the business.
(B) In computing the tax levied under this paragraph, there shall be deducted from the gross income of the taxpayer so much thereof as has been included in the measure of the tax levied under subparagraph (A), on:
(i) Another taxpayer who is a contractor, as defined in section 237-6;
(ii) A specialty contractor, duly licensed by the department of commerce and consumer affairs pursuant to section 444-9, in respect of the specialty contractor's business; or
(iii) A specialty contractor who is not licensed by the department of commerce and consumer affairs pursuant to section 444-9, but who performs contracting activities on federal military installations and nowhere else in this State;
provided that any person claiming a deduction under this paragraph shall be required to show in the person's return the name and general excise number of the person paying the tax on the amount deducted by the person.
(C) In computing the tax levied under this paragraph against any federal cost-plus contractor, there shall be excluded from the gross income of the contractor so much thereof as fulfills the following requirements:
(i) The gross income exempted shall constitute reimbursement of costs incurred for materials, plant, or equipment purchased from a taxpayer licensed under this chapter, not exceeding the gross proceeds of sale of the taxpayer on account of the transaction; and
(ii) The taxpayer making the sale shall have certified to the department that the taxpayer is taxable with respect to the gross proceeds of the sale, and that the taxpayer elects to have the tax on gross income computed the same as upon a sale to the state government.
(D) A person who, as a business or as a part of a business in which the person is engaged, erects, constructs, or improves any building or structure, of any kind or description, or makes, constructs, or improves any road, street, sidewalk, sewer, or water system, or other improvements on land held by the person (whether held as a leasehold, fee simple, or otherwise), upon the sale or other disposition of the land or improvements, even if the work was not done pursuant to a contract, shall be liable to the same tax as if engaged in the business of contracting, unless the person shows that at the time the person was engaged in making the improvements the person intended, and for the period of at least one year after completion of the building, structure, or other improvements the person continued to intend to hold and not sell or otherwise dispose of the land or improvements. The tax in respect of the improvements shall be measured by the amount of the proceeds of the sale or other disposition that is attributable to the erection, construction, or improvement of such building or structure, or the making, constructing, or improving of the road, street, sidewalk, sewer, or water system, or other improvements. The measure of tax in respect of the improvements shall not exceed the amount which would have been taxable had the work been performed by another, subject as in other cases to the deductions allowed by subparagraph (B). Upon the election of the taxpayer, this paragraph may be applied notwithstanding that the improvements were not made by the taxpayer, or were not made as a business or as a part of a business, or were made with the intention of holding the same. However, this paragraph shall not apply in respect of any proceeds that constitute or are in the nature of rent; all such gross income shall be taxable under paragraph (9); provided that insofar as the business of renting or leasing real property under a lease is taxed under section 237-16.5, the tax shall be levied by section 237-16.5.
(4) Tax upon theaters, amusements, radio broadcasting stations, etc.
(A) Upon every person engaging or continuing within the State in the business of operating a theater, opera house, moving picture show, vaudeville, amusement park, dance hall, skating rink, radio broadcasting station, or any other place at which amusements are offered to the public, the tax shall be equal to four and one-half per cent of the gross income of the business, and in the case of a sale of an amusement at wholesale under section 237-4(a)(13), the tax shall be one-half of one per cent of the gross income.
(B) The department may require that the person rendering an amusement at wholesale take from the licensed seller a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:
(i) Any licensed seller who furnishes a certificate shall be obligated to pay to the person rendering the amusement, upon demand, the amount of additional tax that is imposed upon the seller whenever the sale is not at wholesale; and
(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the person rendering the sale is exclusively rendering the amusement at wholesale.
(5) Tax upon sales representatives, etc. Upon every person classified as a representative or purchasing agent under section 237-1, engaging or continuing within the State in the business of performing services for another, other than as an employee, there is likewise hereby levied and shall be assessed and collected a tax equal to four and one-half per cent of the commissions and other compensation attributable to the services so rendered by the person.
(6) Tax on service business.
(A) Upon every person engaging or continuing within the State in any service business or calling including professional services not otherwise specifically taxed under this chapter, there is likewise hereby levied and shall be assessed and collected a tax equal to four and one-half per cent of the gross income of the business, and in the case of a wholesaler under section 237‑4(a)(10), the tax shall be equal to one-half of one per cent of the gross income of the business.
(B) The department may require that the person rendering a service at wholesale take from the licensed seller a certificate, in a form prescribed by the department, certifying that the sale is a sale at wholesale; provided that:
(i) Any licensed seller who furnishes a certificate shall be obligated to pay to the person rendering the service, upon demand, the amount of additional tax that is imposed upon the seller whenever the sale is not at wholesale; and
(ii) The absence of a certificate in itself shall give rise to the presumption that the sale is not at wholesale unless the person rendering the sale is exclusively rendering services at wholesale.
(C) Where any person is engaged in the business of selling interstate or foreign common carrier telecommunication services within and without the State, other than as a home service provider, the tax shall be imposed on that portion of gross income received by a person from service which is originated or terminated in this State and is charged to a telephone number, customer, or account in this State notwithstanding any other state law (except for the exemption under section 237-23(a)(1)) to the contrary. If, under the Constitution and laws of the United States, the entire gross income as determined under this paragraph of a business selling interstate or foreign common carrier telecommunication services cannot be included in the measure of the tax, the gross income shall be apportioned as provided in section 237-21; provided that the apportionment factor and formula shall be the same for all persons providing those services in the State.
(D) Where any person is engaged in the business of a home service provider, the tax shall be imposed on the gross income received or derived from providing interstate or foreign mobile telecommunications services to a customer with a place of primary use in this State when such services originate in one state and terminate in another state, territory, or foreign country; provided that all charges for mobile telecommunications services which are billed by or for the home service provider are deemed to be provided by the home service provider at the customer's place of primary use, regardless of where the mobile telecommunications originate, terminate, or pass through; provided further that the income from charges specifically derived from interstate or foreign mobile telecommunications services, as determined by books and records that are kept in the regular course of business by the home service provider in accordance with section 239-24, shall be apportioned under any apportionment factor or formula adopted under subparagraph (C). Gross income shall not include:
(i) Gross receipts from mobile telecommunications services provided to a customer with a place of primary use outside this State;
(ii) Gross receipts from mobile telecommunications services that are subject to the tax imposed by chapter 239;
(iii) Gross receipts from mobile telecommunications services taxed under section 237-13.8; and
(iv) Gross receipts of a home service provider acting as a serving carrier providing mobile telecommunications services to another home service provider's customer.
For the purposes of this paragraph, "charges for mobile telecommunications services", "customer", "home service provider", "mobile telecommunications services", "place of primary use", and "serving carrier" have the same meaning as in section 239-22.
(7) Tax on insurance producers. Upon every person engaged as a licensed producer pursuant to chapter 431, there is hereby levied and shall be assessed and collected a tax equal to 0.15 per cent of the commissions due to that activity.
(8) Tax on receipts of sugar benefit payments. Upon the amounts received from the United States government by any producer of sugar (or the producer's legal representative or heirs), as defined under and by virtue of the Sugar Act of 1948, as amended, or other Acts of the Congress of the United States relating thereto, there is hereby levied a tax of one-half of one per cent of the gross amount received; provided that the tax levied hereunder on any amount so received and actually disbursed to another by a producer in the form of a benefit payment shall be paid by the person or persons to whom the amount is actually disbursed, and the producer actually making a benefit payment to another shall be entitled to claim on the producer's return a deduction from the gross amount taxable hereunder in the sum of the amount so disbursed. The amounts taxed under this paragraph shall not be taxable under any other paragraph, subsection, or section of this chapter.
(9) Tax on other business. Upon every person engaging or continuing within the State in any business, trade, activity, occupation, or calling not included in the preceding paragraphs or any other provisions of this chapter, there is likewise hereby levied and shall be assessed and collected, a tax equal to four and one-half per cent of the gross income thereof. In addition, the rate prescribed by this paragraph shall apply to a business taxable under one or more of the preceding paragraphs or other provisions of this chapter, as to any gross income thereof not taxed thereunder as gross income or gross proceeds of sales or by taxing an equivalent value of products, unless specifically exempted."
SECTION 18. Section 237-15, Hawaii Revised Statutes, is amended to read as follows:
"§237-15 Technicians. When technicians supply dentists or physicians with dentures, orthodontic devices, braces, and similar items which have been prepared by the technician in accordance with specifications furnished by the dentist or physician, and such items are to be used by the dentist or physician in the dentist's or physician's professional practice for a particular patient who is to pay the dentist or physician for the same as a part of the dentist's or physician's professional services, the technician shall be taxed as though the technician were a manufacturer selling a product to a licensed retailer, rather than at the rate of four and one-half per cent which is generally applied to professions and services."
SECTION 19. Section 237-16.5, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) This section relates to the leasing of real property by a lessor to a lessee. There is hereby levied, and shall be assessed and collected annually, a privilege tax against persons engaging or continuing within the State in the business of leasing real property to another, equal to four and one-half per cent of the gross proceeds or gross income received or derived from the leasing; provided that where real property is subleased by a lessee to a sublessee, the lessee, as provided in this section, shall be allowed a deduction from the amount of gross proceeds or gross income received from its sublease of the real property. The deduction shall be in the amount allowed under this section.
All deductions under this section and the name and general excise tax number of the lessee's lessor shall be reported on the general excise tax return. Any deduction allowed under this section shall only be allowed with respect to leases and subleases in writing and relating to the same real property."
2. By amending subsection (f) to read:
"(f) This section shall not cause the tax upon a lessor, with respect to any item of the lessor's gross proceeds or gross income, to exceed four and one-half per cent."
SECTION 20. Section 237-18, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:
"(f) Where tourism related services are furnished through arrangements made by a travel agency or tour packager and the gross income is divided between the provider of the services and the travel agency or tour packager, the tax imposed by this chapter shall apply to each such person with respect to such person's respective portion of the proceeds, and no more.
As used in this subsection "tourism related services" means catamaran cruises, canoe rides, dinner cruises, lei greetings, transportation included in a tour package, sightseeing tours not subject to chapter 239, admissions to luaus, dinner shows, extravaganzas, cultural and educational facilities, and other services rendered directly to the customer or tourist, but only if the providers of the services other than air transportation are subject to a four and one-half per cent tax under this chapter or chapter 239."
SECTION 21. Section 237-31, Hawaii Revised Statutes, is amended to read as follows:
"§237-31 Remittances. (a) All remittances of taxes imposed by this chapter shall be made by money, bank draft, check, cashier's check, money order, or certificate of deposit to the office of the department of taxation to which the return was transmitted.
(b) The department shall issue its receipts therefor to the taxpayer and shall pay the moneys into the state treasury as a state realization, to be kept and accounted for as provided by law; provided that:
(1) A sum, not to exceed $5,000,000, from all general excise tax revenues realized by the State shall be deposited in the state treasury in each fiscal year to the credit of the compound interest bond reserve fund;
(2) A sum from all general excise tax revenues realized by the State that is equal to one-half of the total amount of funds appropriated or transferred out of the hurricane reserve trust fund under sections 4 and 5 of Act 62, Session Laws of Hawaii 2011, shall be deposited into the hurricane reserve trust fund in fiscal year 2013-2014 and in fiscal year 2014-2015; provided that the deposit required in each fiscal year shall be made by October 1 of that fiscal year; and
[[](3)[]]Commencing with fiscal year 2018-2019,
a sum from all general excise tax revenues realized by the State that
represents the difference between the state public employer's annual required
contribution for the separate trust fund established under section 87A-42 and
the amount of the state public employer's contributions into that trust fund
shall be deposited to the credit of the State's annual required contribution
into that trust fund in each fiscal year, as provided in section 87A-42.
(c) Beginning on January 1, 2019, the additional revenues generated by the increase in general excise tax and use tax pursuant to Act , Session Laws of Hawaii 2017, shall be deposited into a special account in the general fund and shall be distributed as follows:
(1) Between January 1, 2019, and , $ shall be transferred on a quarterly basis to the director of finance of a county that has adopted a surcharge on state tax pursuant to Act 247, Session Laws of Hawaii 2005, as amended by Act 240, Session Laws of Hawaii 2015; provided that the funds shall only be transferred if the county provides matching funds in the amount of one-half of the state funds to be transferred; provided further that the transferred funds shall only be used by the county for purposes of section 46-16.8(e), as that section read on the date prior to the effective date of this Act; provided further that any county receiving funds under this section shall submit a report to the legislature twenty days prior to the convening of each regular session on how the transferred funds were expended and the progress of the county in meeting the requirements of section 46-16.8(e), as that section read on the date prior to the effective date of this Act;
(2) Between January 1, 2019, and , $ shall be expended for the purposes of education; highway and road construction, maintenance, and repair; affordable housing; and programs and services for the elderly; and
(3) Beginning on , one hundred per cent of the additional revenues shall be used for the purposes of paragraph (2)."
SECTION 22. Section 238-2, Hawaii Revised Statutes, is amended to read as follows:
"§238-2 Imposition of tax on tangible personal property; exemptions. There is hereby levied an excise tax on the use in this State of tangible personal property which is imported by a taxpayer in this State whether owned, purchased from an unlicensed seller, or however acquired for use in this State. The tax imposed by this chapter shall accrue when the property is acquired by the importer or purchaser and becomes subject to the taxing jurisdiction of the State. The rates of the tax hereby imposed and the exemptions thereof are as follows:
(1) If the importer or purchaser is licensed under chapter 237 and is:
(A) A wholesaler or jobber importing or purchasing for purposes of sale or resale; or
(B) A manufacturer importing or purchasing material or commodities which are to be incorporated by the manufacturer into a finished or saleable product (including the container or package in which the product is contained) wherein it will remain in such form as to be perceptible to the senses, and which finished or saleable product is to be sold in such manner as to result in a further tax on the activity of the manufacturer as the manufacturer or as a wholesaler, and not as a retailer,
there shall be no tax; provided that if the wholesaler, jobber, or manufacturer is also engaged in business as a retailer (so classed under chapter 237), paragraph (2) shall apply to the wholesaler, jobber, or manufacturer, but the director of taxation shall refund to the wholesaler, jobber, or manufacturer, in the manner provided under section 231-23(c) such amount of tax as the wholesaler, jobber, or manufacturer shall, to the satisfaction of the director, establish to have been paid by the wholesaler, jobber, or manufacturer to the director with respect to property which has been used by the wholesaler, jobber, or manufacturer for the purposes stated in this paragraph;
(2) If the importer or purchaser is licensed under chapter 237 and is:
(A) A retailer or other person importing or purchasing for purposes of sale or resale, not exempted by paragraph (1);
(B) A manufacturer importing or purchasing material or commodities which are to be incorporated by the manufacturer into a finished or saleable product (including the container or package in which the product is contained) wherein it will remain in such form as to be perceptible to the senses, and which finished or saleable product is to be sold at retail in this State, in such manner as to result in a further tax on the activity of the manufacturer in selling such products at retail;
(C) A contractor importing or purchasing material or commodities which are to be incorporated by the contractor into the finished work or project required by the contract and which will remain in such finished work or project in such form as to be perceptible to the senses;
(D) A person engaged in a service business or calling as defined in section 237-7, or a person furnishing transient accommodations subject to the tax imposed by section 237D-2, in which the import or purchase of tangible personal property would have qualified as a sale at wholesale as defined in section 237-4(a)(8) had the seller of the property been subject to the tax in chapter 237; or
(E) A publisher of magazines or similar printed materials containing advertisements, when the publisher is under contract with the advertisers to distribute a minimum number of magazines or similar printed materials to the public or defined segment of the public, whether or not there is a charge to the persons who actually receive the magazines or similar printed materials,
the tax shall be one-half of one per cent of the purchase price of the property, if the purchase and sale are consummated in Hawaii; or, if there is no purchase price applicable thereto, or if the purchase or sale is consummated outside of Hawaii, then one-half of one per cent of the value of such property; and
(3) In all other cases, four and one-half per cent of the value of the property.
For purposes of this section, tangible personal property is property that is imported by the taxpayer for use in this State, notwithstanding the fact that title to the property, or the risk of loss to the property, passes to the purchaser of the property at a location outside this State. Where plaintiff: (1) caused consumer electronic goods from various mainland vendors to be shipped to Hawaii in order to restock plaintiff's retail stores in this State, constituting importation of goods into the State for purposes of resale; and (2) used the goods in Hawaii by "keeping the property" in this State "for sale", plaintiff was subject to assessment of the use tax under this section."
SECTION 23. Section 238-2.3, Hawaii Revised Statutes, is amended to read as follows:
"§238-2.3 Imposition of tax on imported services or contracting; exemptions. There is hereby levied an excise tax on the value of services or contracting as defined in section 237-6 that are performed by an unlicensed seller at a point outside the State and imported or purchased for use in this State. The tax imposed by this chapter shall accrue when the service or contracting as defined in section 237-6 is received by the importer or purchaser and becomes subject to the taxing jurisdiction of the State. The rates of the tax hereby imposed and the exemptions from the tax are as follows:
(1) If the importer or purchaser is licensed under chapter 237 and is:
(A) Engaged in a service business or calling in which the imported or purchased services or contracting become identifiable elements, excluding overhead, of the services rendered by the importer or purchaser, and the gross income of the importer or purchaser is subject to the tax imposed under chapter 237 on services at the rate of one-half of one per cent;
(B) A manufacturer importing or purchasing services or contracting that become identifiable elements, excluding overhead, of a finished or saleable product (including the container or package in which the product is contained) and the finished or saleable product is to be sold in a manner that results in a further tax on the manufacturer as a wholesaler, and not a retailer; or
(C) A contractor importing or purchasing contracting that become identifiable elements, excluding overhead, of the finished work or project required under the contract; provided that:
(i) The gross proceeds derived by the contractor are subject to the tax under section 237‑13(3) as a contractor; and
(ii) The contractor could have deducted amounts paid to the subcontractor under section 237‑13(3)(B) if the subcontractor was subject to general excise tax under chapter 237;
there shall be no tax imposed on the value of the imported or purchased services or contracting; provided that if the manufacturer is also engaged in business as a retailer as classified under chapter 237, paragraph (2) shall apply to the manufacturer, but the director of taxation shall refund to the manufacturer, in the manner provided under section 231-23(c), that amount of tax that the manufacturer, to the satisfaction of the director, shall establish to have been paid by the manufacturer to the director with respect to services that have been used by the manufacturer for the purposes stated in this paragraph.
(2) If the importer or purchaser is a person licensed under chapter 237 and is:
(A) Engaged in a service business or calling in which the imported or purchased services or contracting become identifiable elements, excluding overhead, of the services rendered by the importer or purchaser, and the gross income from those services when sold by the importer or purchaser is subject to the tax imposed under chapter 237 at the highest rate;
(B) A manufacturer importing or purchasing services or contracting that become identifiable elements, excluding overhead, of the finished or saleable manufactured product (including the container or package in which the product is contained) and the finished or saleable product is to be sold in a manner that results in a further tax under chapter 237 on the activity of the manufacturer as a retailer; or
(C) A contractor importing or purchasing services that become identifiable elements, excluding overhead, of the finished work or project required, under the contract, and where the gross proceeds derived by the contractor are subject to the tax under section 237-13(3) as a contractor,
the tax shall be one-half of one per cent of the value of the imported or purchased services or contracting; and
(3) In all other cases, the importer or purchaser is subject to the tax at the rate of four and one-half per cent on the value of the imported or purchased services or contracting."
SECTION 24. Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;
(2) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act; and
(3) If an ordinance to levy a county surcharge on
state tax is adopted [by December 31, 2005:] or extended:
(A) The ordinance shall be repealed on [December
31, 2022; provided that the repeal of the ordinance shall not affect the
validity or effect of an ordinance to extend a surcharge on state tax adopted
pursuant to Act , Session Laws of Hawaii 2015;] January
1, 2019;
(B) This Act shall be repealed on [December
31, 2027;] January 1, 2019; and
(C) Section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act; provided that the amendments made to section 437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of Hawaii 2008, as amended by Act 11, Session Laws of Hawaii 2009, and Act 110, Session Laws of Hawaii 2014, shall not be repealed."
PART V
SECTION 25. The provisions of this Act shall amend any other conflicting Act passed by the legislature during the regular session of 2017.
SECTION 26. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 27. This Act shall take effect on July 1, 2050; provided that part II shall take effect on July 1, 2017; provided further that section 4 shall apply to taxable years beginning after December 31, 2016; provided further that if the requirements of sections 13, 14, and 15 are met as of December 31, 2027, then part I of this Act shall be repealed; provided further that if the requirements of sections 13, 14, and 15 are not met as of December 31, 2027, then parts I and III of this Act shall be repealed on January 1, 2028; provided further that sections 17 to 20, 22, and 23 shall apply to taxable years beginning after December 31, 2018.
Report Title:
Taxation; General Excise Tax; Counties
Description:
Part I: Authorizes counties that have established a surcharge on state tax prior to 7/1/2015 to extend the surcharge in perpetuity. Authorizes counties that have not established a surcharge by 7/1/2017 to establish a surcharge on state tax. Provides that the State shall retain an unspecified portion of surcharge proceeds for DoTax. Requires a county's share of the county surcharge on state tax to be paid to the county on a monthly basis. Part II: Establishes an income tax credit that reduces the tax liability for low-income taxpayers if their federal adjusted gross income falls below federal poverty guidelines. Authorizes all counties to establish a surcharge on state tax prior to 7/1/2018. Makes permanent the county surcharge on state tax. Provides that the State shall retain an unspecified portion of surcharge proceeds for deposit into the state highway fund. Requires a county's share of the county surcharge on state tax to be paid to the county on a monthly basis. Specifies how county surcharges collected shall be allocated among the counties. Part III: Authorizes counties that have established a surcharge on state tax prior to 7/1/2015 to extend the surcharge to December 31, 2032; provided that HCDA transfers specified parcels to the city and county of Honolulu and the city and county of Honolulu meets other requirements prior to December 31, 2027. Repeals parts I and III on January 1, 2028, if the requirements are not met. Authorizes counties that have not established a surcharge on state tax by 7/1/2017 to establish a surcharge. Part IV: Increases the general excise and use tax from four per cent to four and one-half per cent. Specifies that an unspecified amount of the additional revenues shall be transferred to any county adopting a surcharge on state tax; provided that such a county matches up to half of the transferred funds. Limits the expenditures allowed by the county. Requires any county adopting a county surcharge on state tax who receives additional tax revenue to report to the legislature annually on revenues and expenditures. Specifies that an unspecified amount of the additional revenues shall be used by the state for education, department of transportation, affordable housing, and elderly programs and services purposes. Repeals the county surcharge on state tax on January 1, 2019. Effective July 1, 2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
