Honolulu, Hawaii



RE:    S.B. No. 1230

       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. 1230, S.D. 1, entitled:




begs leave to report as follows:


     The purpose of this measure is to address the loss of tax revenue from real property transactions involving non-resident sellers and from transactions involving the transfer of ownership of legal entities that hold real property interests.


     Your Committee finds that the economic recession dictates that the State improve and fully maximize the collection of taxes in all areas of economic activity.  This includes complex transactions involving the purchase, transfer, or exchange of real property located in Hawaii through the sale or exchange of ownership interests in legal entities.  Under present law, many of these complex transactions involving the transfer of real property occur tax free and some even escape the payment of conveyance taxes.


     Accordingly, your Committee has replaced the contents of the measure with provisions to create a new tax that is separate from the conveyance tax and is imposed on an individual or entity engaged in the sale of any ownership interest or partial ownership interest of an entity that holds real property located in Hawaii.  The newly created tax would assess a fair tax on transactions designed to avoid liability under the conveyance tax.


     Your Committee also finds that in testimony presented in the previous subject matter committee, this new tax was suggested as a good dedicated source of funding for culturally significant places and programs such as Mauna Ala, Iolani Palace, and the Bishop Museum.


     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. 1230, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1230, S.D. 2.


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