STAND. COM. REP. NO.288

Honolulu, Hawaii

, 2001

RE: H.B. No. 950

H.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred H.B. No. 950 entitled:

"A BILL FOR AN ACT RELATING TO CAPITAL GOODS EXCISE TAX CREDIT,"

begs leave to report as follows:

The purpose of this bill is to allow the use of capitalized costs under the capital goods excise tax credit.

The Department of Taxation testified in opposition to this measure. The Tax Foundation of Hawaii and Shigeji Sato & Company submitted comments on the measure.

In discussion, it was pointed out that under the current definition of "cost," the phrase "the actual invoice price" does not have a commonly understood meaning. Furthermore, there is no definition of this term and it is not a term that is normally used in tax law. This makes the definition subject to interpretation, which may lead to uneven compliance and enforcement regarding application of capital goods excise tax credit.

Your Committee has amended this bill by:

(1) Redefining "cost" as the basis from which depreciation is taken or from which a deduction may be taken, to the extent that the basis was subject to tax at the rate of four percent under the general excise or use tax; and

(2) Making technical, nonsubstantive amendments for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 950, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 950, H.D. 1, and be referred to the Committee on Finance.

 

Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,

____________________________

LEI AHU ISA, Chair