HOUSE OF REPRESENTATIVES

H.C.R. NO.

57

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 
   


HOUSE CONCURRENT

RESOLUTION

 

REQUESTING THE DEPARTMENT OF TAXATION TO CONDUCT A STUDY TO DETERMINE A RETAIL SALES TAX RATE SUFFICIENT TO REPLACE THE STATE INCOME, GENERAL EXCISE, AND FUEL TAXES.

 

 

WHEREAS, new ideas and actions are needed to propel Hawaii into the twenty-first century; and

WHEREAS, in order to achieve this objective, the State must reassess state government and find new and innovative ways to stimulate the economy and assist the taxpaying public; and

WHEREAS, the general excise tax, a long established and regressive form of taxing businesses, is ripe for change; and

WHEREAS, the general excise tax ignores the economic health of businesses in Hawaii and is assessed and collected even if a business experiences a loss; and

WHEREAS, the general excise tax has been criticized for its pyramiding effect, which adds "hidden taxes" to the final cost of goods and services; and

WHEREAS, even though these "hidden taxes" on goods and services have been lowered recently, they continue to add to the cost of doing business in the State; and

WHEREAS, another state tax that is ripe for change is the state income tax; and

WHEREAS, the income tax, although used in most taxing jurisdictions, is a tax that is regressive and applied inequitably in certain situations; and

WHEREAS, a sales tax, unlike an income tax -- which is paid only by Hawaii residents, is also paid by tourists and business visitors to the State; and

WHEREAS, if food, medicine, and medical equipment are excluded from a sales tax, Hawaii residents could choose to buy only those goods and services they need, thereby limiting their tax burden; and

WHEREAS, the general excise tax does not offer that flexibility; and

WHEREAS, another burden on Hawaii's businesses is the fuel tax, which is the highest in the nation and increases an already high fuel cost; and

WHEREAS, the cost of virtually every good and service in Hawaii includes a fuel tax component; and

WHEREAS, businesses in Hawaii would be better served if a sales tax were substituted for the general excise, income, and fuel taxes; and

WHEREAS, a sales tax would not pose the pyramiding problems of the general excise tax and is well-understood and used in an overwhelming majority of taxing jurisdictions in the United States; and

WHEREAS, a sales tax is a more direct, profit-related tax, with a larger tax base, that is more equitably distributed and is assessed only on those who actually consume the good or service being taxed; now, therefore

BE IT RESOLVED by the House of Representatives of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2004, the Senate concurring, that the Department of Taxation is requested to conduct a study to determine a retail sales tax rate sufficient to replace the revenues produced by the state income, general excise, and fuel taxes; and

BE IT FURTHER RESOLVED that the Department of Taxation is requested to include in its calculations, exemptions in the sales tax for food, prescription drugs, and other medical necessities; and

BE IT FURTHER RESOLVED that the Department of Taxation is requested to report its findings, including any necessary proposed legislation, to the Legislature no later than twenty days before the convening of the Regular Session of 2005; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor and the Director of Taxation.

 

 

 

OFFERED BY:

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Report Title:

Retail Sales Tax; GET; Income Tax; Fuel Tax