SB2029

THE SENATE	S.B. NO.	2029
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII

A BILL FOR AN ACT

relating to general excise tax.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that Hawaii taxpayers are some of the most overburdened taxpayers in the nation. The legislature further finds that providing Hawaii consumers with a general excise tax holiday on the purchase of clothing and footwear with a sale price of one hundred dollars or less per item will stimulate retail sales and give a boost to the State's economy.

The tax holiday is established in August of each year in order to coincide with family shopping for their children's upcoming school year. However, because the general excise tax is imposed on the retailer rather than the consumer, it is imperative that the tax savings be passed on to the consumer.

Tax holidays have been successfully implemented across the United States. Texas lifted its 6.25 per cent state sales tax--along with all local sales taxes--on clothing and footwear under $100. Thirteen other states have also established similar programs.

Tax holidays have been found to create sales, not merely displace sales from a different time. Many Texas retailers reported seeing crowds usually seen only during the Christmas selling season. To accommodate all of the shoppers, stores in Texas adopted extended hours, added staff, and offered special promotions usually reserved for the Christmas season. While depressed sales might be expected after a tax holiday, retailers did not report fewer sales after a sales spike. The legislature finds that a similar program in Hawaii would help both consumers and retailers alike.

The purpose of this Act is to stimulate the economy in Hawaii by giving consumers a holiday from the general excise tax on clothing and footwear that costs one hundred dollars or less per item provided that the tax savings is passed onto the consumer.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Annual general excise tax holiday. (a) Notwithstanding any law to the contrary, taxes imposed by this chapter shall not be levied, assessed, or collected on the retail sale of clothing or footwear with the sales price of one hundred dollars or less per item if sold between 12:01 A.M. on the first Friday of August and 11:59 P.M. the following Sunday.

(b) The exemption provided by this section shall not apply to:

(1) Accessories, including jewelry, handbags, purses, briefcases, luggage, umbrellas, wallets, and watches;

(2) The rental of clothing;

(3) Taxable services performed on the clothing, such as repair, remodeling, maintenance services, and cleaning or laundry services;

(4) Purchases of items used to make or repair clothing, including fabric, thread, yarn, buttons, snaps, hooks, and zippers;

(5) Rebates, layaway sales, rain checks, or exchanges when the exchanges occur before or after the tax holiday period; or

(6) Items purchased via the internet, telephone, or mail-order.

(c) Articles that are normally sold as a unit shall continue to be sold in that manner and shall be priced separately and sold as individual items to obtain the exemption.

(d) The retailer shall not be required to obtain any special license, permit, or other documentation on sales of eligible items during the exemption holiday period. However, the retailer's records shall clearly identify the type of item sold, the date the item was sold, and the sales price of the item.

(e) No special reporting procedures shall be necessary to report exempt sales made during the exemption holiday period. Sales shall be reported as currently required by law. The department may further clarify the items that are exempt under this section by rules adopted pursuant to chapter 91."

SECTION 3. The director of taxation shall report to the legislature not later than twenty days prior to the convening of the 2009 Regular Session on the costs of the tax holiday provided under this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________