Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred H.B. No. 427 entitled:

begs leave to report as follows:

The purpose of this bill is to accelerate the phase-in of the depyramiding of the general excise tax (GET) schedule from 0.5 percent per year to 1.0 percent per year.

Your Committee notes that Act 71, Session Laws of Hawaii 1999, provided for a phased-in reduction of the GET, beginning with calendar year 2000, over a seven-year period. This bill would speed up the phase-in of the reduction of the GET so that depyramiding of the GET would end in calendar year 2003 instead of calendar year 2006.

While your Committee is carefully examining the merits of each "tax cut" bill with regard to strengthening the state economy, your Committee is also taking a broader look at the implications of all of these bills in toto. It is also the intent of your Committee to pass out those "tax cut" bills that have merit to provide the House Committee on Finance with enough latitude and legislative options to help the economy.

The Chamber of Commerce of Hawaii, Hawaii Attractions Association, and Retail Merchants of Hawaii testified in support of this bill. The Department of Taxation and the Department of Budget and Finance testified in opposition to the bill. The Tax Foundation of Hawaii submitted comments on this bill.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 427 and recommends that it pass Second Reading and be referred to the Committee on Finance.