STAND. COM. REP. 2825

Honolulu, Hawaii

, 2004

RE: S.B. No. 2396

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2396 entitled:

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

begs leave to report as follows:

The purpose of this measure is to exempt from the general excise tax the gross income received by certain charitable groups for designated convention, conference, and trade show fees.

Specifically, the bill exempts from general excise taxes the following gross income derived by fraternal benefit, religious, charitable, scientific, educational, or other association or organization:

(1) Convention, conference, or trade show registration fees;

(2) Fees for convention, conference, or trade show exhibit or display spaces;

(3) Fees for advertising and promotion at the convention, conference, or trade show, or related brochures; and

(4) Private contributions.

Additionally, the bill provides that the gross proceeds of sales received by a vendor through the use of exhibit or display space at a conference, convention, or trade show is subject to the general excise tax.

Your Committee finds that in recent years, the Legislature addressed the problems associated with the general excise tax by eliminating or reducing its pyramiding effect. At the time, however, the Legislature did not contemplate any general excise tax problem with exhibit space at conventions, conferences, or trade shows. Inasmuch as the State is committed to revitalizing the economy by promoting its primary economic engine -- tourism, especially with the use of the relatively new Hawaii Convention Center, assessing the general excise tax on the resale of exhibit space at places like the convention center appears counterproductive to that commitment. Charitable groups that are paying the general excise tax for exhibit space should not be taxed again on the same space that is resold to exhibitors.

A general excise tax exemption for certain charitable groups in this situation will not only promote tourism and fuel economic growth, but will also provide tax equity and an incentive to charitable group promoters to do business in Hawaii.

Your Committee has amended the bill by making technical changes that have no substantive effect.

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. 2396, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2396, S.D. 1.

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

____________________________

BRIAN T. TANIGUCHI, Chair