Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 407, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require the Department of Taxation to continue working with the federal government, local businesses, and the labor community to develop a system to enforce the collection of the general excise tax (GET) from mainland contractors working in Hawaii on federal projects. This measure also requires the assistance from the federal government and authorizes the Director of Taxation to enter into contracts to collect these taxes.

Your Committee received written comments on this measure from the Building Industry Association.

Your Committee finds that Hawaii is only collecting approximately twenty-five per cent of the GET revenues from general contractors working on construction projects in Hawaii for the federal government. Your Committee further finds that although the Department of Taxation currently has a method of collection in place, this method is not working in the most effective manner. Thus, your Committee supports this measure to enable the Department of Taxation to better collect the GET from mainland contractors.

Your Committee has amended this measure by changing the effective date to July 1, 2050, to further discussion and by making technical, nonsubstantive changes.

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 H.B. No. 407, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 407, H.D. 1, S.D. 1.