REPORT TITLE:
Taxation


DESCRIPTION:
Exempts from GET amounts received from foreign diplomats and
consular officials.  Exempts from TAT accommodations furnished to
foreign diplomats and consular officials.  Exempts from use tax
property, services, or contracting imported by foreign diplomats
and consular officials (HB1691 HD1).

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1691
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 237-24.3, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "237-24.3  Additional amounts not taxable.  In addition to
 
 4 the amounts not taxable under section 237-24, this chapter shall
 
 5 not apply to:
 
 6      (1)  Amounts received from the loading, transportation, and
 
 7           unloading of agricultural commodities shipped for a
 
 8           producer or produce dealer on one island of this State
 
 9           to a person, firm, or organization on another island of
 
10           this State.  The terms "agricultural commodity",
 
11           "producer", and "produce dealer" shall be defined in
 
12           the same manner as they are defined in section 147-1;
 
13           provided that agricultural commodities need not have
 
14           been produced in the State;
 
15      (2)  Amounts received from sales of:
 
16           (A)  Intoxicating liquor as the term "liquor" is
 
17                defined in chapter 244D;
 
18           (B)  Cigarettes and tobacco products as defined in
 
19                chapter 245; and
 

 
Page 2                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           (C)  Agricultural, meat, or fish products grown,
 
 2                raised, or caught in Hawaii, to any person or
 
 3                common carrier in interstate or foreign commerce,
 
 4                or both, whether ocean-going or air, for
 
 5                consumption out-of-state on the shipper's vessels
 
 6                or airplanes;
 
 7      (3)  Amounts received by the manager or board of directors
 
 8           of:
 
 9           (A)  An association of apartment owners of a
 
10                condominium property regime established in
 
11                accordance with chapter 514A; or
 
12           (B)  A nonprofit homeowners or community association
 
13                incorporated in accordance with chapter 415B or
 
14                any predecessor thereto and existing pursuant to
 
15                covenants running with the land,
 
16           in reimbursement of sums paid for common expenses;
 
17      (4)  Amounts received or accrued from:
 
18           (A)  The loading or unloading of cargo from ships,
 
19                barges, vessels, or aircraft, whether or not the
 
20                ships, barges, vessels, or aircraft travel between
 
21                the State and other states or countries or between
 
22                the islands of the State;
 

 
 
 
Page 3                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           (B)  Tugboat services including pilotage fees performed
 
 2                within the State, and the towage of ships, barges,
 
 3                or vessels in and out of state harbors, or from
 
 4                one pier to another; and
 
 5           (C)  The transportation of pilots or governmental
 
 6                officials to ships, barges, or vessels offshore;
 
 7                rigging gear; checking freight and similar
 
 8                services; standby charges; and use of moorings and
 
 9                running mooring lines;
 
10      (5)  Amounts received by an employee benefit plan by way of
 
11           contributions, dividends, interest, and other income;
 
12           and amounts received by a nonprofit organization or
 
13           office, as payments for costs and expenses incurred for
 
14           the administration of an employee benefit plan;
 
15           provided that this exemption shall not apply to any
 
16           gross rental income or gross rental proceeds received
 
17           after June 30, 1994, as income from investments in real
 
18           property in this State; and provided further that gross
 
19           rental income or gross rental proceeds from investments
 
20           in real property received by an employee benefit plan
 
21           after June 30, 1994, under written contracts executed
 
22           prior to July 1, 1994, shall not be taxed until the
 
23           contracts are renegotiated, renewed, or extended, or
 

 
Page 4                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           until after December 31, 1998, whichever is earlier.
 
 2           For the purposes of this paragraph, "employee benefit
 
 3           plan" means any plan as defined in section 1002(3) of
 
 4           title 29 of the United States Code, as amended;
 
 5      (6)  Amounts received for purchases made with United States
 
 6           Department of Agriculture food coupons under the
 
 7           federal food stamp program, and amounts received for
 
 8           purchases made with United States Department of
 
 9           Agriculture food vouchers under the Special
 
10           Supplemental Foods Program for Women, Infants and
 
11           Children;
 
12      (7)  Amounts received by a hospital, infirmary, medical
 
13           clinic, health care facility, pharmacy, or a
 
14           practitioner licensed to administer the drug to an
 
15           individual for selling prescription drugs or prosthetic
 
16           devices to an individual; provided that this paragraph
 
17           shall not apply to any amounts received for services
 
18           provided in selling prescription drugs or prosthetic
 
19           devices.  As used in this paragraph:
 
20           (A)  "Prescription drugs" are those drugs defined under
 
21                section [[]328-1[]] and dispensed by filling or
 
22                refilling a written or oral prescription by a
 
23                practitioner licensed under law to administer the
 

 
Page 5                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1                drug and sold by a licensed pharmacist under
 
 2                section 328-16 or practitioners licensed to
 
 3                administer drugs; and
 
 4           (B)  "Prosthetic device" means any artificial device or
 
 5                appliance, instrument, apparatus, or contrivance,
 
 6                including their components, parts, accessories,
 
 7                and replacements thereof, used to replace a
 
 8                missing or surgically removed part of the human
 
 9                body, which is prescribed by a licensed
 
10                practitioner of medicine, osteopathy, or podiatry
 
11                and which is sold by the practitioner or which is
 
12                dispensed and sold by a dealer of prosthetic
 
13                devices; provided that "prosthetic device" shall
 
14                not mean any auditory, ophthalmic, dental, or
 
15                ocular device or appliance, instrument, apparatus,
 
16                or contrivance;
 
17      (8)  Taxes on transient accommodations imposed by chapter
 
18           237D and passed on and collected by operators holding
 
19           certificates of registration under that chapter;
 
20      (9)  Amounts received as dues by an unincorporated merchants
 
21           association from its membership for advertising media,
 
22           promotional, and advertising costs for the promotion of
 
23           the association for the benefit of its members as a
 

 
Page 6                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           whole and not for the benefit of an individual member
 
 2           or group of members less than the entire membership;
 
 3           [and]
 
 4     (10)  Amounts received by a labor organization for real
 
 5           property leased to:
 
 6           (A)  A labor organization; or
 
 7           (B)  A trust fund established by a labor organization
 
 8                for the benefit of its members, families, and
 
 9                dependents for medical or hospital care, pensions
 
10                on retirement or death of employees,
 
11                apprenticeship and training, and other membership
 
12                service programs.
 
13           As used in this paragraph, "labor organization" means a
 
14           labor organization exempt from federal income tax under
 
15           section 501(c)(5) of the Internal Revenue Code, as
 
16           amended[.]; and 
 
17     (11)  Amounts received from foreign diplomats and consular
 
18           officials who are holding cards issued or authorized by
 
19           the United States Department of State granting them an
 
20           exemption from state taxes."
 
21      SECTION 2.  Section 237D-3, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "237D-3 Exemptions.  This chapter shall not apply to:
 

 
Page 7                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1      (1)  Health care facilities including all such facilities
 
 2           enumerated in section 321-11(10)[.];
 
 3      (2)  School dormitories of a public or private educational
 
 4           institution providing education in grades kindergarten
 
 5           through twelve, or of any institution of higher
 
 6           education[.];
 
 7      (3)  Lodging provided by nonprofit corporations or
 
 8           associations for religious, charitable, or educational
 
 9           purposes; provided that this exemption shall apply only
 
10           to the activities of the religious, charitable, or
 
11           educational corporation or association as such and not
 
12           to any rental or gross rental the primary purpose of
 
13           which is to produce income even if the income is used
 
14           for or in furtherance of the exempt activities of such
 
15           religious, charitable, or educational corporation or
 
16           association[.];
 
17      (4)  Living accommodations for persons in the military on
 
18           permanent duty assignment to Hawaii, including the
 
19           furnishing of transient accommodations to those
 
20           military personnel who receive temporary lodging
 
21           allowances while seeking accommodations in Hawaii or
 
22           while awaiting reassignment to new duty stations
 
23           outside the State[.];
 

 
Page 8                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1      (5)  Low-income renters receiving rental subsistence from
 
 2           the state or federal governments and whose rental
 
 3           periods are for durations shorter than sixty days[.];
 
 4      (6)  Operators of transient accommodations who furnish
 
 5           accommodations to full-time students enrolled in an
 
 6           institution offering post-secondary education.  The
 
 7           director of taxation shall determine what shall be
 
 8           deemed acceptable proof of full-time enrollment.  This
 
 9           exemption shall also apply to operators who furnish
 
10           transient accommodations to students during summer
 
11           employment[.];
 
12      (7)  Accommodations furnished without charge such as, but
 
13           not limited to, complimentary accommodations,
 
14           accommodations furnished to contract personnel such as
 
15           physicians, golf or tennis professionals, swimming and
 
16           dancing instructors, and other personnel to whom no
 
17           salary is paid or to employees who receive room and
 
18           board as part of their salary or compensation[.]; and
 
19      (8)  Accommodations furnished to foreign diplomats and
 
20           consular officials who are holding cards issued or
 
21           authorized by the United States Department of State
 
22           granting them an exemption from state taxes."
 

 
 
 
Page 9                                                     1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1      SECTION 3.  Section 238-1, is amended by amending the
 
 2 definition of "use" to read as follows:
 
 3      ""Use" (and any nounal, verbal, adjectival, adverbial, and
 
 4 other equivalent form of the term) herein used interchangeably
 
 5 means any use, whether the use is of such nature as to cause the
 
 6 property or services to be appreciably consumed or not, or the
 
 7 keeping of the property or services for such use or for sale, and
 
 8 shall include the exercise of any right or power over tangible or
 
 9 intangible personal property incident to the ownership of that
 
10 property, but the term "use" shall not include:
 
11      (1)  Temporary use of property, not of a perishable or
 
12           quickly consumable nature, where the property is
 
13           imported into the State for temporary use (not sale)
 
14           therein by the person importing the same and is not
 
15           intended to be, and is not, kept permanently in the
 
16           State (as for example without limiting the generality
 
17           of the foregoing language:
 
18           (A)  In the case of a contractor importing permanent
 
19                equipment for the performance of a construction
 
20                contract, with intent to remove, and who does
 
21                remove, the equipment out of the State upon
 
22                completing the contract;
 

 
 
 
Page 10                                                    1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           (B)  In the case of moving picture films imported for
 
 2                use in theaters in the State with intent or under
 
 3                contract to transport the same out of the State
 
 4                after completion of such use; and
 
 5           (C)  In the case of a transient visitor importing an
 
 6                automobile or other belongings into the State to
 
 7                be used by the transient visitor while therein but
 
 8                which are to be used and are removed upon the
 
 9                transient visitor's departure from the State);
 
10      (2)  Use by the taxpayer of property acquired by the
 
11           taxpayer solely by way of gift;
 
12      (3)  Use which is limited to the receipt of articles and the
 
13           return thereof, to the person from whom acquired,
 
14           immediately or within a reasonable time either after
 
15           temporary trial or without trial;
 
16      (4)  Use of goods imported into the State by the owner of a
 
17           vessel or vessels engaged in interstate or foreign
 
18           commerce and held for and used only as ship stores for
 
19           the vessels;
 
20      (5)  The use or keeping for use of household goods, personal
 
21           effects, and private automobiles imported into the
 
22           State for nonbusiness use by a person who:
 

 
 
 
Page 11                                                    1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1           (A)  Acquired them in another state, territory,
 
 2                district, or country;
 
 3           (B)  At the time of the acquisition was a bona fide
 
 4                resident of another state, territory, district, or
 
 5                country;
 
 6           (C)  Acquired the property for use outside the State;
 
 7                and
 
 8           (D)  Made actual and substantial use thereof outside
 
 9                this State;
 
10           provided that as to an article acquired less than three
 
11           months prior to the time of its importation into the
 
12           State it shall be presumed, until and unless clearly
 
13           proved to the contrary, that it was acquired for use in
 
14           the State and that its use outside the State was not
 
15           actual and substantial;
 
16      (6)  The leasing or renting of any aircraft or the keeping
 
17           of any aircraft solely for leasing or renting to
 
18           lessees or renters using the aircraft for commercial
 
19           transportation of passengers and goods;
 
20      (7)  The use of oceangoing vehicles for passenger or
 
21           passenger and goods transportation from one point to
 
22           another within the State as a public utility as defined
 
23           in chapter 269;
 

 
Page 12                                                    1691
                                     H.B. NO.           H.D. 1
                                                             
                                                        
                                                        

 1      (8)  The use of material, parts, or tools imported or
 
 2           purchased by a person licensed under chapter 237 which
 
 3           are used for aircraft service and maintenance, or the
 
 4           construction of an aircraft service and maintenance
 
 5           facility as those terms are defined in section
 
 6           237-24.9; [and]
 
 7      (9)  The use of services imported for resale to a foreign
 
 8           customer located outside the State to the extent the
 
 9           services are resold, consumed, or used by that foreign
 
10           customer outside the State pursuant to section
 
11           237-29.53(a)[.]; and
 
12     (10)  The use of property, services, or contracting imported
 
13           by foreign diplomats and consular officials who are
 
14           holding cards issued or authorized by the United States
 
15           Department of State granting them an exemption from
 
16           state taxes." 
 
17      SECTION 4.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 5.  This Act shall take effect on July 1, 2000.