STAND. COM. REP. NO. 751

Honolulu, Hawaii

RE:    S.B. No. 755

       S.D. 2

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 755, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

     The purpose and intent of this measure is to create a general excise tax exemption for retail sales of specified items transacted during a five-day period each summer.

     Your Committee received comments in support of this measure from the Chamber of Commerce of Hawaii; and Carol Pregill, President, Retail Merchants of Hawaii.  The Department of the Attorney General submitted comments.

     Your Committee finds that as the State's economy makes a slow recovery, a general excise tax holiday as provided in this measure will afford consumers temporary relief and spark consumer confidence and spending, as well as provide temporary assistance to local businesses.  Some studies show that this type of tax holiday results in job creation and a net increase in tax revenues based upon the increased economic activity.  An ancillary effect, especially in the retail industry, is that it increases store traffic and encourages spending not only on items that are exempted from the tax but on non-exempt items, which in turn generates tax revenues.

     Your Committee has amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 755, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 755, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair