RESOLUTION

WHEREAS, a general excise tax holiday gives both consumers and businesses a break from the high cost of living in Hawaii by establishing an annual general excise tax holiday; and

WHEREAS, a general excise tax holiday creates an incentive to stimulate consumer spending within our economy; and

WHEREAS, the idea of a general excise tax holiday has come before the legislature, and most recently, under House Bill No. 479, Regular Session of 2005, all sales of items under $100 would be exempt from the normal retail or general excise tax of four per cent for a period of seven days; and

WHEREAS, tax holidays have been used successfully across the United States, for example, Texas lifted its 6.25 per cent state sales tax, along with all local sales taxes, on clothing and footwear, and reported a tremendous increase in sales for the tax holiday period; and

WHEREAS, other states have adopted similar "tax holidays" ranging from two to 10 days and from $100 to $500 in tax-free spending ceilings; and

WHEREAS, New York initiated its three-day tax-free holiday in 1997 and continues to hold it every August, and other once-a-year tax-free periods are scheduled the same month to accommodate back-to-school shopping in West Virginia, Texas, Connecticut, Iowa, North and South Carolina, Florida and the District of Columbia; and

WHEREAS, Georgia has two-day tax holidays in March and August for clothing costing as much as $100, with the second date also exempting taxes on home computers costing as much as $1,500; and

WHEREAS, Pennsylvania has a week-long tax holiday in February strictly for computer purchases; and

WHEREAS, tax holidays have been found to create sales, as many Texas retailers reported seeing crowds usually seen only during the Christmas selling season; and

WHEREAS, to accommodate all of the shoppers, stores in Texas adopted extended hours, added staff, and offered special promotions usually reserved for holidays; and

WHEREAS, the anticipated depressed sales after a tax holiday do not materialize as retailers have not noticed fewer sales after a sales spike; and

WHEREAS, a tax holiday would stimulate retail sales and give a boost to our economy, helping both consumers and retailers alike; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, the Senate concurring, that the legislature requests the Legislative Reference Bureau to conduct a feasibility study and cost analysis of the establishment of a general excise tax retail holiday, including the best time in the year to establish the holiday; and

BE IT FURTHER RESOLVED that the department of taxation is requested to cooperate with the legislative reference bureau in the study by providing it with any data already accumulated; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to submit its findings to the Legislature no later than 20 days prior to the convening of the Regular Session of 2006; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Legislative Reference Bureau and the Director of the Department of Taxation.

Report Title:

General Excise Tax Holiday; study