STAND. COM. REP. NO. 1061

Honolulu, Hawaii

RE:    H.B. No. 252

       H.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred H.B. No. 252, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONVEYANCE TAXES FOR SPECULATIVE SALES,"

begs leave to report as follows:

     The purpose of this measure is to curb speculative residential homes sales by increasing the conveyance tax rates for sales of condominiums or single family residences where the purchaser is ineligible for a county homeowner's property tax exemption. 

     Your Committee received testimony in support of this measure from the Nature Conservancy of Hawaii, the Trust for Public Land, and the Sierra Club-Hawaii.  Testimony in opposition to this measure was submitted by the Department of Taxation; the Hawaii Association of Realtors; the National Federation of Independent Business; Wyndham Vacation Ownership, Inc.; and one individual.  The Hawaii Tax Foundation submitted comments.

     The Department of Taxation testified that this measure would result in a revenue gain to the general fund of less than $565,620.  The Department of Taxation did not provide testimony as to the method used in determining the fiscal impact of this measure.

     Your Committee finds that certain percentages of the conveyance tax are paid to the Land Conservation Fund, the Natural Area Reserve Fund, and the Rental Housing Trust Fund.  This measure will increase the conveyance tax rate and create more revenue to support these recipients.  In addition, since the conveyance tax increase would only apply to dwelling sales for which the purchaser is ineligible for a county homeowner's property tax exemption, the tax increase would help curb speculative investment in residential property, thereby potentially resulting in more stable and affordable dwelling prices.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 252, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Affordable Housing,

____________________________

BRIAN T. TANIGUCHI, Chair