Report Title:

Taxation; Hawaii Tax Review Initiative



Establishes the Hawaii tax review initiative to review and report on whether Hawaii's tax policies are relevant and effective in achieving Hawaii's long-term economic and social goals and objectives.



H.B. NO.














relating to taxation.





     SECTION 1.  As Hawaii nears the fiftieth anniversary of its statehood, there is no better time to review and evaluate one of state and local government's most import functions -- taxation.  Taxation not only provides revenue for government programs and operations, it is a reflection of the goals, priorities, and values of our community.  Taxes serve as a means to direct social and economic policy, providing incentives and deterrents to impact human and corporate behavior to achieve economic and social goals.  Taxes can also provide a fair and equitable way to balance the needs and resources of Hawaii's diverse taxpaying residents and entities.

     Applied to dozens of revenue sources ranging from individual and corporate income, real property, transit accommodations, fuel, general excise, liquor, tobacco, unemployment, conveyance and other sources, Hawaii's tax system has evolved over the decades.  Whenever tax authorizations are established, lawmakers make those decisions considering social, economic and community goals and conditions that are relevant at the time.  As time passes, however, economic and social conditions change, calling into question the relevancy, effectiveness, or applicability of the goals and purposes of the tax when created.  Some existing tax laws were enacted before statehood and continue to be imposed on residents and entities without review and update.

     The purpose of this Act is to obtain the information and perspectives necessary to enact legislation that will improve and adjust Hawaii's tax code to meet current and future community goals.

     SECTION 2.  (a)  There is established and attached to the department of budget and finance for administrative purposes only, the Hawaii tax review initiative, the purpose of which shall be to explore the historical development and evolution of taxation in Hawaii to determine if the State's tax policies are relevant and effective in achieving Hawaii's current long-term economic and social goals and objectives.

     (b)  Five local and national tax and economics specialists shall be appointed to the Hawaii tax review initiative and shall review the State's tax code and comment on how the State's tax policy impacts:

     (1)  Economic development and diversification;

     (2)  Low, middle, and upper income resident taxpayers;

     (3)  State and county government operations;

     (4)  Urban, agricultural, rural, and conservation land uses; and

     (5)  Relevancy and effectiveness of the tax code under current circumstances.

    (c)   The members of the Hawaii tax review initiative shall be appointed without regard to section 26-34 as follows:

     (1)  Two by the speaker of the house of representatives;

     (2)  Two by the president of the senate; and

     (3)  One by the governor;

provided that three members shall be national tax scholars and two shall be local tax and economic specialists.

     (c)  Members of the Hawaii tax review initiative shall serve without compensation but shall be reimbursed for necessary expenses, including travel expenses.

     (d)  The Hawaii tax review initiative shall submit a written report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2010 and participate in a statewide tax symposium to be presented to the legislature and general public during the regular session of 2010.

     (e)  The Hawaii tax review imitative shall cease to exist on June 30, 2010.

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $        or so much thereof as may be necessary for fiscal year 2009-2010 for the operations of the Hawaii tax review initiative.

     The sum appropriated shall be expended by the department of budget and finance for the purposes of this Act.

     SECTION 4.  This Act shall take effect on July 1, 2009.