STAND. COM. REP. NO. 1309

Honolulu, Hawaii

RE:    H.B. No. 1719

       H.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committees on Economic Development and Taxation and Tourism and Government Operations, to which was referred H.B. No. 1719, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO GENERAL EXCISE TAX,"

beg leave to report as follows:

     The purpose of this measure is to extend the current general excise tax exemption for condominium common expenses paid by managers and hotel employee expenses paid by hotel operators, to include expenses paid by submanagers and suboperators and to include employee expenses in timeshare projects.

     Testimony in support of this measure was received from Outrigger Hotels and Wyndham Vacation Ownership, Inc.  The Department of Taxation (Department) and the Tax Foundation of Hawaii submitted comments.

     The Department stated in written testimony that the revenue impact for this measure would be a revenue loss of approximately $1,500,000 each year.  The Department did not submit the methodology used to determine this fiscal impact.

     Your Committees find that changes in visitor accommodations, such as more timeshares, resort condos, or condominium-hotels, have led to differences in how these less traditional facilities are managed.  This measure would extend equitable treatment to these newer forms of management and operations, which currently are in place for hotels under more traditional management.

     As affirmed by the records of votes of the members of your Committees on Economic Development and Taxation and Tourism and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1719, H.D. 1, and recommend that it pass Second Reading and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Economic Development and Taxation and Tourism and Government Operations,

____________________________ CLARENCE K. NISHIHARA, Chair

____________________________ CAROL FUKUNAGA, Chair