Honolulu, Hawaii



RE:    S.B. No. 1678

       S.D. 2




Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii




     Your Committee on Ways and Means, to which was referred S.B. No. 1678, S.D. 1, entitled:




begs leave to report as follows:


     The purpose of this measure is to allow Hawaii to participate in the Streamlined Sales and Use Tax Agreement.


     Specifically, this measure:


     (1)  Moves the one-half of one per cent tax rate for wholesale transactions to a new chapter;


     (2)  Adds a new chapter on the taxation of imports of property, services, and contracting;


     (3)  Moves the 0.15 per cent tax on insurance producers to a new chapter; and


     (4)  Eliminates the tax on businesses owned by disabled persons.


     Your Committee received five written comments on this measure.  The written comments may be reviewed on the Legislature's website.


     Your Committee finds that Act 173, Session Laws of Hawaii 2003, the Hawaii Simplified Sales and Use Tax Administration Act allowed the State to become a participating member of the National Streamlined Sales Tax Project.  The Project was intended to prepare member states to participate in the Streamlined Sales and Use Tax Agreement.  Participation in the Agreement would allow the State to level the playing field with respect to assisting local businesses to better compete with mail order and internet sellers who may not necessarily be paying their fair share of state taxes.  Participation in the Agreement would also assist the State in the collection of additional revenue to address a projected budgetary shortfall and reduced projected tax collections.


     Your Committee finds that as a final step to the State's participation in the Agreement, this Act provides the necessary legislation to conform certain state tax laws to the requirements of the Streamlined Sales and Use Tax Agreement.


     Your Committee has amended the measure by:


     (1)  Correcting drafting errors with respect to the text of the Hawaii Revised Statutes; and


     (2)  Making technical amendments for purposes of clarity and style.


     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1678, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1678, S.D. 2.


Respectfully submitted on behalf of the members of the Committee on Ways and Means,