STAND. COM. REP. NO. 951

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 169

       H.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

 

Madam:

 

     Your Committee on Tourism and International Affairs, to which was referred H.B. No. 169, H.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to amend the definition of "fair market rental value" used in the transient accommodations tax law and increase the amount of transient accommodations tax imposed on resort time share vacation units by one percent on fair market rental value each year until reaching 9.25 percent of fair market rental value.

 

     Your Committee received testimony in support of this measure from the Land Use Research Foundation of Hawaii.  Your Committee received testimony in opposition to this measure from the American Resort Development Association Hawaii and Chamber of Commerce Hawaii.  Your Committee received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, Grassroot Institute of Hawaii, Wyndham Vacation Ownership, Starwood Vacation Ownership, Outrigger Enterprises, and Hawaii Lodging & Tourism Association.

 

     Your Committee finds that the intent of this measure is to help alleviate a disparity in the transient accommodations tax law that imposes a significantly lower tax burden on timeshares than other transient accommodation rental operators.  Current law imposes a tax rate of 9.25 percent of gross rental income received in exchange for furnishing transient accommodations on hotels and other non-timeshare transient accommodation rental operators.  Timeshares are subject to a 7.25 percent tax rate on one-half of the gross daily maintenance fees paid by the owner of the unit, which is often substantially less than the full fair market value of the room, which results in a discounted tax burden for timeshares.

 

     As affirmed by the record of votes of the members of your Committee on Tourism and International Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 169, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committee on Tourism and International Affairs,

 

 

 

________________________________

GILBERT KAHELE, Chair