REPORT TITLE:
GET; Business Deduction


DESCRIPTION:
Provides a deduction from gross income for GET purposes for
certain businesses.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           196
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT
RELATING TO TAXATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that Hawaii's economy is
 
 2 still stagnate after seven years.  The council on revenues
 
 3 projects state tax revenues of plus 1.0 per cent for the fiscal
 
 4 year ending June 30, 1999, and minus 1.6 per cent for the fiscal
 
 5 year ending June 30, 2000.
 
 6      During the last legislative session, the legislature passed
 
 7 the largest personal income tax reduction in the history of the
 
 8 State.  Little, however, was done directly for Hawaii's
 
 9 businesses.  In the past, the legislature has granted targeted
 
10 tax credits or exemptions to selected businesses to encourage
 
11 their growth and many of these targeted tax incentives have been
 
12 directed to encourage non-Hawaii businesses to come to Hawaii.
 
13      The legislature finds that the time is more than ripe to
 
14 provide a tax incentive to Hawaii businesses.  The legislature
 
15 finds that instead of eliminating the corporate income tax, which
 
16 would not take place immediately, the $50 million in revenues
 
17 lost thorough this elimination can be better used to allow the
 
18 retailers and construction industry in Hawaii a deduction from
 
19 gross income thereby reducing the amount of general excise tax
 
20 that must be paid.  A deduction from the gross income of a
 

 
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                                     S.B. NO.           196
                                                        
                                                        

 
 1 business can take place almost immediately while a tax credit or
 
 2 the elimination of a tax takes a period of time.  This deduction
 
 3 would immediately place moneys in the pockets of these businesses
 
 4 which could be used for other purposes in the Hawaii economy.
 
 5      The purpose of this Act is to provide a deduction from gross
 
 6 income for general excise tax purposes for retailers and the
 
 7 construction industry.
 
 8      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 
 9 by adding a new section to be appropriately designated and to
 
10 read as follows:
 
11      "§237-     Business encouragement deduction.  (a)  Each
 
12 retailer subject to section 237-16(a) and each contractor subject
 
13 to 237-13(3), may take a deduction from gross income or gross
 
14 proceeds as provided in this section.
 
15      (b)  The deduction allowed under this section during the
 
16 taxable years shall not exceed:
 
17      (1)  $         , if the taxpayer's gross income or gross
 
18           proceeds for the taxable year is under $25,000;
 
19      (2)  $         , if the taxpayer's gross income or gross
 
20           proceeds for the taxable year is $25,000 but under
 
21           $50,000; or
 
22      (3)  $         , if the taxpayer's gross income or gross
 
23           proceeds for the taxable years is $50,000 or more.
 

 
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                                     S.B. NO.           196
                                                        
                                                        

 
 1      (c)  Deductions under this section must be taken each
 
 2 taxable year.  Failure to claim a deduction within four months
 
 3 after the taxable year has expired shall be deemed a waiver to
 
 4 the claim for a deduction."
 
 5      SECTION 3.  New statutory material is underscored.
 
 6      SECTION 4.  This Act shall take effect on July 1, 1999, and
 
 7 shall apply to gross income and gross proceeds received after
 
 8 June 30, 1999; provided that this Act shall be repealed on
 
 9 December 31, 2004.
 
10 
 
11                           INTRODUCED BY:  _______________________