Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 407 entitled:

begs leave to report as follows:

The purpose of this bill is to ensure that contractors working on federal construction projects in Hawaii pay state general excise taxes (GET) by:

1. Requiring the Department of Taxation (DOTAX) to work with the federal government to develop a system to enforce tax collection;
2. Request the assistance of the federal government; and
3. Require a report to the Legislature on the need for any proposed legislation.

The General Contractors Association of Hawaii testified in support of this bill. The Subcontractors' Association of Hawaii supported the intent of this bill. The Department of Taxation opposed this bill.

Your Committee recognizes that the DOTAX is already making a good effort to collect the general excise tax from mainland contractors who either willingly or unknowingly fail to pay. However, DOTAX's future success will be dependent upon cooperation from the federal government and assistance from the local business and labor community.

Your Committee has amended this bill by:

1. Acknowledging DOTAX's prior efforts and requiring the continuance of this work in conjunction with the local business and labor community to collect the GET;
2. Allowing DOTAX to hire licensed attorneys, accountants, auditors, or other persons to pursue and collect claims for delinquent general excise taxes or other collection provisions under chapter 231, Hawaii Revised Statutes;
3. Giving DOTAX discretionary rulemaking authority; and
4. Making other technical, nonsubstantive amendments for clarity and style.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 407, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 407, H.D. 1, and be placed on the calendar for Third Reading.