Report Title:

County Excise and Use Tax Surcharge

Description:

Repeals the provision allowing each county to establish a one-half per cent general excise and use tax (GETU) surcharge, and allows counties with populations of 200,000 or more to establish a blank per cent general excise and use tax surcharge. Changes the transient accommodations tax allocations to the counties and Tourism Special Fund if GETU surcharge is imposed. (HB1554 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1554

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to county taxes.

 

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

SECTION 1. Section 46-16.7, Hawaii Revised Statutes, is amended to read as follows:

"§46-16.7 County general excise and use tax surcharge. (a) Each county[,] with a population of two hundred thousand or more, except the county of Kalawao, may establish a general excise and use tax surcharge of [one-half] per cent. Each county shall establish the general excise and use tax surcharge by ordinance [adopted before October 1, 1992, which shall take effect on January 1, 1993, and remain in effect for ten years through December 31, 2002, unless earlier repealed, pursuant to subsection (c)]. No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance. Notice of the public hearing shall be published in a newspaper of general circulation within the county at least twice within a period of thirty days immediately preceding the date of the hearing. [If a county fails to adopt a county general excise and use tax surcharge ordinance by October 1, 1992, the county shall not be covered by this section.]

(b) Each county shall notify the director of taxation within ten days after the county has adopted a general excise and use tax surcharge ordinance, and the director of taxation shall levy, assess, collect, and otherwise administer the general excise and use tax surcharge [for the taxable year beginning January 1, 1993, and for taxable years thereafter through December 31, 2002,] as provided by chapters 237 and 238.

[(c) The general excise and use tax surcharges received from the State by each county shall be used as follows:

(1) The city and county of Honolulu shall use the surcharges to develop a fixed rail rapid transit system. All private source revenues generated or pledged to develop a fixed rail rapid transit system that are received prior to the operation of the system shall be used as county matching funds for moneys requested from the transit capital development fund, pursuant to chapter 51D, before surcharges may be used. The director of finance shall determine whether or not private sources are adequate to meet county matching requirements. The director of finance shall submit a report of the findings to the legislature. Upon legislative acceptance of the findings, within sixty days of the first regular legislative session convened following the submittal of the findings, no additional moneys may be expended from the transit fund; provided that:

(A) Such limitation on the expenditure of moneys from the transit fund shall not occur prior to December 31, 1992; and

(B) Private source revenues received prior to the operation of the system or received in each year that the surcharge is in effect shall be committed to the funding of the capital costs of the fixed rail rapid transit system prior to any determination regarding the duration of the surcharge.

(2) All surcharges collected by the State for the city and county of Honolulu but not used for the purpose of developing a fixed rail rapid transit system shall be deposited into the state treasury to be returned to the taxpayers who resided in the city and county of Honolulu for more than two hundred days of the taxable year in the aggregate during the time that the surcharges were collected, in the form of an income tax credit, the amount of the credit to be determined by law.

(3) The general excise and use tax surcharge shall be repealed upon the determination by the director of finance that all authorized capital costs of the fixed rail rapid transit system or county projects under paragraph (4) have been collected and distributed pursuant to chapter 248.

(4) The counties of Hawaii, Kauai, and Maui shall use the surcharges for public transportation systems, including mass transportation, sewage, or water development, and parks, including park operation, maintenance, infrastructure, or purchase.

(d) As used in this section:

"Capital costs" means nonrecurring costs required to construct a transit facility or system, including debt service, costs of land acquisition and development, acquiring of rights-of-way, planning, design, and construction, including equipping and furnishing the facility or system.

"Private source revenue" means all funds, concessions, development rights, or those assets of value contractually agreed upon with the county from sources other than state, county, or federal governments as a result of, or for the purposes of, developing mass transportation.]"

SECTION 2. Section 237-8.5, Hawaii Revised Statutes, is amended to read as follows:

"§237-8.5 County general excise and use tax surcharge; administration. (a) The county general excise and use tax surcharge, upon the adoption of county ordinances under section 46-16.7, shall be levied, assessed, and collected as provided in this section on all gross proceeds and gross income taxable under this chapter [at the four per cent tax rate in such manner that the combined state general excise tax and the county general excise and use tax surcharge tax shall be four and one-half per cent in those counties adopting the surcharge]. All provisions of this chapter shall apply to the county general excise and use tax surcharge; and with respect to the surcharge, the director shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person is engaged in business and, in the case of a person engaged in business in more than one county, the director shall determine through apportionment or other means, that portion of the general excise and use tax surcharge attributable to business conducted in each county.

[(b) Each county general excise and use tax surcharge adopted pursuant to section 46-16.7(a) shall be levied as of January 1, 1993, and shall continue for a period of ten years through December 31, 2002, or until earlier repealed.

(c)] (b) The county general excise and use tax surcharge shall be imposed on the gross proceeds or gross income of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross proceeds or gross income are received as payments [after December 31, 1992,] on written contracts [entered into before June 19, 1990, and the written contracts] that do not provide for the passing on of increased rates of taxes, the county general excise and use tax surcharge shall not be imposed on the gross proceeds or gross income covered under the written contracts. The county general excise and use tax surcharge shall be imposed on the gross proceeds or gross income from all contracts [entered into on or after June 19, 1990], whether or not the contract allows for the passing on of any tax or any tax increases.

[(d)] (c) No county general excise and use tax surcharge shall be established on any:

(1) Gross income or gross proceeds taxable under this chapter at the one-half per cent tax rate;

(2) Gross income or gross proceeds taxable under this chapter at the 0.15 per cent tax rate; or

(3) Transactions, amounts, persons, gross income, or gross proceeds exempt from tax under this chapter.

[(e)] (d) The director of taxation shall revise the general excise tax forms to provide for the clear and separate designation of the imposition and payment of the county general excise and use tax surcharge.

The taxpayer shall designate the taxation district to which the county general excise and use tax surcharge is assigned in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual general excise and use tax returns summarizing the amount of taxes assigned to each taxation district.

The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the general excise tax by taxation district on the schedule required under this subsection.

[(f) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31, 1992, or after December 31, 2002, shall file a short period annual return for the period preceding January 1, 1993, or preceding January 1, 2003. Each fiscal year taxpayer shall also file a short period annual return for the period starting after December 31, 1992, and ending before January 1, 1994, and for the period starting after December 31, 2002, and ending before January 1, 2004.

All monthly, annual, and amended returns due under this chapter for any period preceding January 1, 2003, which are submitted to the department after December 31, 2002, shall include in payments submitted with the return any county general excise and use tax surcharge that may be due for the period preceding January 1, 2003.]"

SECTION 3. Section 237D-5.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established in the state treasury the transient accommodations tax trust fund to be administered by the director of finance, into which shall be deposited the revenues prescribed by section 237D-6.5(b)[.] and c."

SECTION 4. Section 237D-6.5, Hawaii Revised Statutes, is amended to read as follows:

"§237D-6.5 Remittances; distribution to counties. (a) All remittances of taxes imposed under this chapter shall be made by cash, bank drafts, cashier's check, money order, or certificate of deposit to the office of the taxation district to which the return was transmitted.

(b) Revenues collected under this chapter shall be distributed as follows:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center enterprise special fund established under section 201B-8; provided that beginning January 1, 2002, if the amount of the revenue collected under this paragraph exceeds $31,000,000 in any calendar year, revenues collected in excess of $31,000,000 shall be deposited into the general fund;

(2) 32.6 per cent of the revenues collected under this chapter shall be deposited into the tourism special fund established under section 201B-11 for tourism promotion and visitor industry research; provided that beginning on July 1, 2002:

(A) If the amount of revenues deposited into the tourism special fund exceeds $62,292,000 in any fiscal year, of the first $1,000,000 in revenues deposited in excess of $62,292,000:

(i) Ninety per cent shall be deposited into the state parks special fund established in section 184-3.4; and

(ii) Ten per cent shall be transferred to the Hawaii statewide trail and access program pursuant to section 198D-2(b)(5);

provided that the total amount deposited into the state parks special fund and to the Hawaii statewide trail and access program shall not exceed $1,000,000 in any fiscal year;

(3) 44.8 per cent of the revenues collected under this chapter shall be transferred as follows: Kauai county shall receive 14.5 per cent, Hawaii county shall receive 18.6 per cent, city and county of Honolulu shall receive 44.1 per cent, and Maui county shall receive 22. 8 per cent; and

(4) 5.3 per cent of the revenues collected under this chapter shall be deposited into the transient accommodations tax trust fund established under section 237D-5.5.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection, and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection.

(c) If the county general excise tax is imposed pursuant to section 46-16.7, revenues collected under this chapter shall be distributed as follows:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center enterprise special fund established under section 201B-8; provided that beginning January 1, 2002, if the amount of the revenue collected under this paragraph exceeds $31,000,000 in any calendar year, revenues collected in excess of $31,000,000 shall be deposited into the general fund;

(2) 36.6 per cent of the revenues collected under this chapter shall be deposited into the tourism special fund established under section 201B-11 for tourism promotion and visitor industry research; provided that beginning on July 1, 2002:

(A) If the amount of revenues deposited into the tourism special fund exceeds $62,292,000 in any fiscal year, of the first $1,000,000 in revenues deposited in excess of $62,292,000:

(i) Ninety per cent shall be deposited into the state parks special fund established in section 184-3.4; and

(ii) Ten per cent shall be transferred to the Hawaii statewide trail and access program pursuant to section 198D-2(b)(5);

provided that the total amount deposited into the state parks special fund and to the Hawaii statewide trail and access program shall not exceed $1,000,000 in any fiscal year;

(3) 40.8 per cent of the revenues collected under this chapter shall be transferred as follows:

(A) Kauai county shall receive 29.2 per cent;

(B) Hawaii county shall receive 33.3 per cent; and

(C) Maui county shall receive 37.5 per cent;

and

(4) 5.3 per cent of the revenues collected under this chapter shall be deposited into the transient accommodations tax trust fund established under section 237D-5.5.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection, and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection.

[(c)](d) On or before January or July 1 of each year or after the disposition of any tax appeal with respect to an assessment for periods after June 30, 1990, the state director of finance shall compute and pay the amount due as provided in subsection (b) and (c) to the director of finance of each county to become a general realization of the county expendable as such, except as otherwise provided by law."

SECTION 5. Section 238-2.5, Hawaii Revised Statutes, is amended to read as follows:

"§238-2.5 County general excise and use tax surcharge; administration. (a) The county general excise and use tax surcharge, upon the adoption of a county ordinance under section 46-16.7, shall be levied, assessed, and collected as provided in this section on the value of property taxable under this chapter [at the four per cent tax rate under section 238-2(3) in a manner that the combined state use tax and the county general excise and use tax surcharge shall be four and one-half per cent in those counties adopting the surcharge]. All provisions of this chapter shall apply to the county general excise and use tax surcharge. With respect to the surcharge, the director shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person imports or purchases tangible personal property and, in the case of a person importing or purchasing tangible property in more than one county, the director shall determine through apportionment or other means, that portion of the general excise and use tax surcharge attributable to the importation or purchase in each county.

[(b) Each county general excise and use tax surcharge shall be levied as of January 1, 1993, and shall continue for a period of ten years through December 31, 2002, or until earlier repealed.

(c)] (b) No county general excise and use tax surcharge shall be established upon any use taxable under this chapter at the one-half per cent tax rate or upon any use that is not subject to taxation or that is exempt from taxation under this chapter.

[(d)] (c) The director of taxation shall revise the use tax forms to provide for the clear and separate designation of the imposition and payment of the county general excise and use tax surcharge.

The taxpayer shall designate the taxation district to which the county general excise and use tax surcharge is assigned in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual general excise and use tax returns summarizing the amount of taxes assigned to each taxation district.

The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the use tax by taxation district on the schedule required under this subsection.

[(e) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31, 1992, or after December 31, 2002, shall file a short period annual return for the period preceding January 1, 1993, or preceding January 1, 2003. Each fiscal year taxpayer shall also file a short period annual return for the period starting after December 31, 1992, and ending before January 1, 1994, and for the period starting after December 31, 2002, and ending before January 1, 2004.

All monthly, annual, and amended returns due under this chapter for any period preceding January 1, 2003, which are submitted to the department after December 31, 2002, shall include in payments submitted with the return any county general excise and use tax surcharge that may be due for the period preceding January 1, 2003.]"

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2004.