Bill Text: HI SB1360 | 2013 | Regular Session | Amended

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Bill Title: General Excise Tax Exemption; Hotel Operators; Timeshare Projects

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-06-25 - Act 163, on 6/21/2013 (Gov. Msg. No. 1266). [SB1360 Detail]

Download: Hawaii-2013-SB1360-Amended.html

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STAND. COM. REP. NO. 705

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1360

       S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 1360 entitled:

 

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

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to make permanent the general excise tax exemptions for certain real property management transactions.

 

     Specifically, the measure makes the following permanently exempt from the imposition of the general excise tax:

 

     (1)  Funds received by submanagers of associations of apartment owners of condominiums or nonprofit homeowners or community associations for reimbursement of common expenses;

 

     (2)  Funds received by a hotel operator from a time share association to pay employee expenses; and

 

     (3)  Funds received by a hotel suboperator from the owner or operator of a hotel or time share association, to pay employee expenses.

 

     Your Committee received written comments in support of this measure from the Hawaii Association of Realtors and Wyndham Vacation Ownership.  Your Committee received written comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

 

     Your Committee finds that Act 239, Session Laws of Hawaii 2007, added amounts derived from certain real property management transactions to amounts already exempt from the general excise tax under section 237-24.3, Hawaii Revised Statutes.  Thereafter, Act 196, Session Laws of Hawaii 2009, set an aggregate cap of $400,000 for taxpayers eligible for the exemptions established by Act 239, Session Laws of Hawaii 2007.

 

Your Committee understands that administering the aggregate cap has been challenging for both the Department of Taxation and taxpayers applying for the exemption because the Department must manually process eligible taxpayer returns to ensure that the aggregate cap is not exceeded.  Your Committee further finds that the aggregate cap has also had the inadvertent effect of treating similarly situated taxpayers inconsistently, because only those taxpayers claiming an exemption pursuant to Act 239, Session Laws of Hawaii 2007, are subject to the aggregate cap, even though all amounts covered by section 237-24.3, Hawaii Revised Statutes, are exempt from taxation.

 

     Accordingly, your Committee has amended this measure by:

 

     (1)  Eliminating the $400,000 aggregate cap on the exemption;

 

     (2)  Providing that the repeal of the aggregate cap shall apply to taxable years beginning after December 31, 2012; and

 

     (3)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

 

     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. 1360, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1360, S.D. 1.

 

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

 

		____________________________ DAVID Y. IGE, Chair