Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 1533, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to provide a general excise tax exemption for amounts received in reimbursement of sums paid for common expenses by the manager or board of directors of an association of owners for a time share plan subject to chapter 514E, Hawaii Revised Statutes (HRS).

When your Committee heard this bill on March 12, 2003, Pacific Management Consultants, Inc., and PAHIO Resorts supported the intent of the bill but asked that decision-making be deferred to allow further discussion of the measure by the interested parties. The Department of Taxation opposed the bill.

Your Committee notes that similar exemptions already exist for a condominium association of apartment owners under chapter 514A, HRS, and a nonprofit homeowners or community association incorporated under chapter 414D, HRS. This provision would provide parity for time share plans.

Your Committee finds that reimbursement for common expenses in this situation should not be taxable because no specific good or service is being purchased.

Your Committee has amended this bill by changing the effective date to July 1, 2099. Technical, nonsubstantive amendments were also made for consistency.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1533, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1533, S.D. 2, H.D. 1, and be referred to the Committee on Finance.