STAND. COM. REP. NO. 557

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1190

       S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 1190 entitled:

 

"A BILL FOR AN ACT RELATING TO THE IMPOSITION OF USE TAX ON IMPORTED CONTRACTING,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to treat imported contracting consistently under the use tax and general excise tax laws.

 

     Your Committee received testimony in support of this measure from the Department of Taxation.

 

     Your Committee received comments on this measure from the Tax Foundation of Hawaii.

 

     Your Committee finds that the use tax is designed to complement the general excise tax, and generally, items should be taxed similarly under both tax laws.  However, confusion exists regarding the tax treatment of imported contracting.  This measure would clarify that imported contracting is subject to a general excise tax at the rate of four per cent, unless exempt from the tax because the gross proceeds received by the contractor are subject to the general excise tax as a contractor.

 

     Your Committee has amended this measure by:

 

     (1)  Moving language limiting the exemption under section 238-2.3(1)(C), Hawaii Revised Statutes, to amounts the contractor could have deducted for payments to subcontractors from the effective date section of the measure to Section 2 of the measure; and

 

     (2)  Making technical nonsubstantive amendments for the 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. 1190, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1190, S.D. 1, and be placed on the calendar for Third Reading.

 

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

 

 

 

____________________________

DAVID Y. IGE, Chair