Report Title:

GET; State Exemption; Central Services Fee

Description:

Provides a general excise tax exemption for sales and services paid by the State, increases the central services fee to 7% and abolishes all central services fee exemptions.

THE SENATE

S.B. NO.

2417

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO GOVERNMENT SERVICES.

 

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

SECTION 1. The legislature finds that the tragic events of September 11, 2001 have had lasting economic repercussions in Hawaii. Dismal state revenue projections and expected budget shortfalls dictate prudent legislative cost-cutting measures as well as new creative ways to reduce state spending.

One way to reduce state spending involves the payment of the general excise tax by sellers of goods and services to the State, which is ultimately passed-on and paid by the State. These tax payments would appear to be circular and of no economic consequence, since general excise tax collections are generally deposited back into the state treasury. But if these payments are made in relation to, and calculated into the total cost of state capital improvement projects, the payments necessarily increase the cost of not only the project itself, but also the cost of financing the project as well as the resulting debt service.

The purpose of this Act is to reduce state spending by exempting sales made to the State from the general excise tax for purchases made for goods and services. The Act also provides other means of reducing state spending.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237- Exemption for sale of goods and services to the State. Notwithstanding any other law to the contrary, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the value or gross proceeds arising from the sale of goods or services provided to the State."

SECTION 3. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"36-27 Transfers from special funds for central service expenses. [Except as provided in this section, and notwithstanding] Notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, [except the:

(1) Special out-of-school time instructional program fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center capital and operations special fund under section 206X-10.5;

(6) Special funds established by section 206E-6;

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

(9) Aloha Tower fund created by section 206J-17;

(10) Domestic violence prevention special fund under section 321-1.3;

(11) Spouse and child abuse special account under section 346-7.5;

(12) Spouse and child abuse special account under section 601-3.6;

(13) Funds of the employees' retirement system created by section 88-109;

(14) Unemployment compensation fund established under section 383-121;

(15) Hawaii hurricane relief fund established under chapter 431P;

(16) Hawaii health systems corporation special funds;

(17) Boiler and elevator safety revolving fund established under section 397-5.5;

(18) Tourism special fund established under section 201B-11;

(19) Department of commerce and consumer affairs' special funds;

(20) Compliance resolution fund established under section 26-9;

(21) Universal service fund established under chapter 269;

(22) Integrated tax information management systems special fund under section 231-3.2;

(23) Insurance regulation fund under section 431:2-215;

(24) Hawaii tobacco settlement special fund under section 328L-2;

(25) Emergency budget and reserve fund under section 328L-3;

(26) Probation services special fund under section 706-649;

(27) High technology special fund under section 206M-15.5;

(28) Public schools special fees and charges fund under section 302A-1130(f);

(29) Cigarette tax stamp enforcement special fund established by section 28-14;

(30) Cigarette tax stamp administrative special fund established by section 245-41.5; and

(31) Tobacco enforcement special fund established by section 28-15;]

shall deduct [five] seven per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 4. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund[, except the:

(1) Transportation use special fund established by section 261D-1;

(2) Special out-of-school time instructional program fund under section 302A-1310;

(3) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center capital and operations special fund established under section 206X-10.5;

(15) Hawaii health systems corporation special funds;

(16) Tourism special fund established under section 201B-11;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund under section 231-3.2;

(20) Insurance regulation fund under section 431:2-215;

(21) Hawaii tobacco settlement special fund under section 328L-2;

(22) Emergency and budget reserve fund under section 328L-3;

(23) Probation services special fund under section 706-649;

(24) High technology special fund under section 206M-15.5;

(25) Public schools special fees and charges fund under section 302A-1130(f);

(26) Cigarette tax stamp enforcement special fund established by section 28-14;

(27) Cigarette tax stamp administrative special fund established by section 245-41.5; and

(28) Tobacco enforcement special fund established by section 28-15;]

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2002.

INTRODUCED BY:

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