WHEREAS, the State of Hawaii is faced with critical budget shortfalls which will drastically impact services and programs for residents of the State; and

WHEREAS, studies have shown that e-commerce revenue loss to the State from sales taxes may total more than $16 billion in 2001 and nearly $45 billion in 2006; and

WHEREAS, a 2002 SMS Hawaii Market Study reported that during a three-month period, more than $37 million was spent at military exchanges compared to $25 million at Sam's club by Oahu military personnel and their guests which were not taxed; and

WHEREAS, the Legislature strongly believes that while active duty military personnel, their families, and retirees are entitled to use military facilities, better enforcement of eligibility requirements for use of military golf courses, banquet facilities, commissaries, and exchanges is needed as unauthorized usage results in revenue loss to competing private sector vendors; and

WHEREAS, there is a concern that use of out-of-state contractors and workers by the federal government for in-state construction projects results in capital flight; and

WHEREAS, questions concerning whether general excise taxes from the use of public facilities such as the Aloha Stadium swap meet are being properly collected; and

WHEREAS, because of the revenue shortfalls, the State of Hawaii is faced with choices of cutting expenditures or increasing taxes to makeup the shortfall; and

WHEREAS, cutting expenditures will have a tremendous impact on our educational system and infrastructure spending that could negatively impact our economic growth; and

WHEREAS, increasing taxes may slow our economic growth by curtailing expenditures of our residents; and

WHEREAS, there may be other alternatives to cutting expenditures and increasing taxes if taxes that should be paid are paid; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2003, that the Legislative Reference Bureau is requested to undertake a study to identify tax losses from, but not limited to, e-commerce, unauthorized military facility usage, and Aloha Stadium swap meet tax collection; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to report its findings and recommendations to the Legislature twenty days prior to the convening of the Regular Session of 2004; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor, the Director of Taxation, the Comptroller, and the Director of Business, Economic Development, and Tourism.

Report Title:

LRB Study; Revenue Loss in Hawaii