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. 502, H.D. 2, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to exempt from the general excise tax certain amounts paid to a professional employment organization on behalf of employees hired by a client company.

Your Committee finds that the intent of this bill is to eliminate the unfair taxation for those Hawaii businesses that may realize added efficiency by contracting out payroll and payroll-related functions. Your Committee finds that since the contracting company renders general excise tax payments, it is appropriate to exempt the organization under the contract from further taxation on the same payroll moneys.

Your Committee believes that this bill will benefit employers, particularly those in the small business sector, while continuing to protect the rights and benefits of employees.

Upon further consideration, your Committee has amended the bill by changing the effective date from July 1, 2010, to July 1, 2020, to make the bill defective in order to promote continuing discussion.

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. 502, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 502, H.D. 2, S.D. 2.