STAND. COM. REP. NO. 2267

Honolulu, Hawaii

RE:    S.B. No. 2643

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committees on Commerce and Consumer Protection and Tourism, to which was referred S.B. No. 2643 entitled:

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

beg leave to report as follows:

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

     Your Committees received testimony in support of this measure from American Resort Development Association-Hawaii, Marriott Vacation Club International, Inc., Starwood Vacation Ownership, Hawai‘i Association of Realtors, Outrigger Enterprises Group, and Wyndham Worldwide.  Tax Foundation of Hawaii submitted comments.  Written testimony presented to the Committees may be reviewed on the Legislature's website.

     Your Committees find that the underlying purpose of this measure, the exemption from the general excise tax for condominium common expenses and for timeshare and hotel employee expenses paid by managers, submanagers, and suboperators, continues to serve the public interest of the State.  By exempting employment-related expenses from the general excise tax, this measure removes a disincentive for owners to pay higher wages and provide higher levels of benefits to employees and to use the services of local operators and local vendors. 

     Your Committees have amended this measure by:

     (1)  Adding a new provision to clarify the meaning of the maximum allowable exemption; and

     (2)  Repealing the sunset date of the general excise tax exemption contained in this measure. 

     Your Committees find that the amendment to this measure preserves the original intent of the exemption, which is to apply the cap to aggregate taxable amounts and not to gross receipts. 

     As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Tourism that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2643, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2643, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Tourism,

____________________________ CLARENCE K. NISHIHARA, Chair

____________________________ ROSALYN H. BAKER, Chair