STAND. COM. REP. NO. 2045

Honolulu, Hawaii

RE:    S.B. No. 3017

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Tourism, to which was referred S.B. No. 3017 entitled:

"A BILL FOR AN ACT RELATING TO THE TRANSIENT ACCOMMODATIONS TAX,"

begs leave to report as follows:

     The purpose and intent of this measure is to clarify that the daily $10 tax on a transient accommodation furnished on a complimentary or gratuitous basis includes transient accommodations furnished without tangible industry development or promotional purposes, but does not include transient accommodations furnished as part of a tourism industry promotional or marketing activity.

     Your Committee received testimony in support of this measure from the Hawaii Tourism Authority and the Hawaii Lodging & Tourism Association.  Your Committee received comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

     Your Committee finds that the intent of this measure is to provide greater certainty regarding the specific types of transient accommodations that are considered complimentary or gratuitous, and subject to the daily $10 tax.  Your Committee understands that there has been some uncertainty in the tourism industry since the law to tax complimentary or gratuitous transient accommodations was enacted in 2011, and the Department of Taxation responded with Tax Information Release No. 2011-05, to clarify the issue.

     After reviewing the Tax Information Release, your Committee believes that further discussion may be necessary to ensure that the terminology is clear.  The Department of Taxation, the Hawaii Tourism Authority, and representatives of the tourism industry have indicated they are willing to work on refining the language in this measure, and your Committee believes that a consensus can be reached as this measure moves through the legislative process.

     Your Committee has amended this measure by deleting rewards programs from those transient accommodations considered complimentary or gratuitous, as those rewards programs are taxed under existing law.

     As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3017, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3017, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Tourism,

____________________________

DONNA MERCADO KIM, Chair