Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Tourism, to which was referred S.B. No. 2396 entitled:

begs leave to report as follows:

The purpose of this measure is to provide a general excise tax exemption for certain entities from fees received from conference, conventions, and trade shows, including fees for advertising and promotion and private contributions.

Testimony in support of this measure was received from the Hawaii Tourism Authority (HTA), Hawaii Hotel & Lodging Association, and Aloha Society of Association Executives. Testimony in opposition was received from the Department of Business, Economic Development and Tourism (DBEDT) and the Department of Taxation (DTAX).

As explained to your Committee in testimony, this measure does not exempt moneys paid by a group to a hotel or convention center from the general excise tax. Instead, it exempts the moneys paid to the group by persons or entities contracting with the group to use the same space the group contracted for. A typical example would be a group that rents space in a hotel or the convention center to hold a convention. The group pays the hotel or the convention center, which is subject to the excise tax. The company typically books the same space to exhibitors who pay the company for the privilege of exhibition. It is this second layer of transactions by specified organizations that would be exempt from paying the excise tax under this measure.

The testimony did not elicit how much general excise tax moneys are involved. While your Committee can appreciate how an exemption might help to attract conventions and the like, an estimate of the dollar amounts the State might lose needs to be made. The HTA and DBEDT have agreed to work with DTAX meanwhile to make an estimate of the revenue loss. As such, your Committee defers this measure to the Committee on Ways and Means for disposition.

As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2396 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.