STAND. COM. REP. NO. 1323

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 317

       H.D. 2

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

 

Madam:

 

     Your Committee on Economic Development and Taxation, to which was referred H.B. No. 317, H.D. 2, entitled:

 

"A BILL FOR AN ACT RELATING TO PROFESSIONAL EMPLOYMENT ORGANIZATIONS,"

 

begs leave to report as follows:

 

     The purpose of this measure is to:

 

     (1)  Exempt from the general excise tax amounts that a client company pays to a professional employment organization that will be expended to pay the wages, salaries, payroll taxes, and benefits of the employees hired by a client company; and

 

     (2)  Provide that the exemption shall not apply if the professional employment organization has received written notification of any violations or has failed to pay withholding for any employee taxes.

 

     Your Committee received testimony in opposition to this measure from Altres, Inc., and one individual.  The Tax Foundation of Hawaii submitted comments.

 

     Your Committee received a statement of revenue impact from the Department of Taxation that the annual revenue loss would be $600,000, and that the methodology for this loss was based on actual case settlements.

 

     Your Committee finds that this legislation would lend clarity to the administration of and the compliance with the general excise tax law for both the Department of Taxation and taxpayers.

 

     Your Committee has amended this measure by:

 

     (1)  Adding the tax exemption amendments language to section 237-24.75, rather than section 237-24.7, Hawaii Revised Statutes;

 

     (2)  Deleting the provision related to written notification by any union or the Department of Labor and Industrial Relations of any violation; and

 

     (3)  Making technical amendments to conform this measure to the preferred drafting style.

 

     As affirmed by the record of votes of the members of your Committee on Economic Development and Taxation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 317, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 317, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

 

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

 

 

 

____________________________

CAROL FUKUNAGA, Chair