HB1360.DOC

SECTION 1. Act 105, Session Laws of Hawaii 2011, is amended as follows:

1. By amending section 1 to read:

"SECTION 1. The purpose of this Act is to [~~temporarily~~] suspend the general excise and use tax exemptions for certain amounts received by certain persons and, instead, require those persons to pay the applicable tax on those amounts at a specified rate. The suspension and imposition of the tax commences on July 1, 2011[~~, and ends on June 30, 2013~~].

This Act does not suspend the existing general excise tax exemption for nonprofit organizations with the exception of the value or gross income received by nonprofit organizations from certain conventions, conferences, trade shows, or display spaces."

2. By amending the title and subsections (a) and (b) of section 237- , relating to temporary suspension of exemption of certain amounts; levy of tax, in section 2 to read:

""§237- [~~Temporary suspension~~] Suspension of exemption of certain amounts; levy of tax. (a) Notwithstanding any other law to the contrary, the exemption of the following amounts from taxation under this chapter shall be suspended from July 1, 2011[~~, through June 30, 2013~~]:

(1) Amounts deducted from the gross income received by contractors as described under section 237-13(3)(B);

(2) Reimbursements received by federal cost-plus contractors for the costs of purchased materials, plant, and equipment as described under section 237-13(3)(C);

(3) Gross receipts of home service providers acting as service carriers providing mobile telecommunications services to other home service providers as described under section 237-13(6)(D);

(4) Amounts deducted from the gross income of real property lessees because of receipt from sublessees as described under section 237-16.5;

(5) The value or gross income received by nonprofit organizations from certain conventions, conferences, trade show exhibits, or display spaces as described under section 237-16.8;

(6) Amounts received by sugarcane producers as described under section 237-24(14);

(7) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped interisland as described under section 237-24.3(1);

(8) Amounts received from the sale of intoxicating liquor, cigarettes and tobacco products, and agricultural, meat, or fish products to persons or common carriers engaged in interstate or foreign commerce as described under section 237-24.3(2);

(9) Amounts received or accrued from the loading or unloading of cargo as described under section 237-24.3(4)(A);

(10) Amounts received or accrued from tugboat services and towage [~~services~~] as described under section 237-24.3(4)(B);

(11) Amounts received or accrued from the transportation of pilots or government officials and other maritime-related services as described under section 237-24.3(4)(C);

(12) Amounts received by labor organizations for real property leases as described under section 237-24.3(10);

(13) Amounts received as rent for the rental and leasing of aircraft or aircraft engines used for interstate air transportation as described under section 237-24.3(12);

(14) Amounts received by exchanges and exchange members as described under section 237-24.5;

(15) Amounts received as high technology research and development grants under section 206M-15 as described under section 237-24.7(10);

(16) Amounts received from the servicing and maintenance of aircraft or construction of aircraft service and maintenance facilities as described under section 237-24.9;

(17) Gross proceeds from the sale of the following:

(A) Intoxicating liquor to the United States (including any agency or instrumentality of the United States that is wholly owned or otherwise so constituted as to be immune from the levy of a tax under chapter 238 or 244D, but not including national banks) or any organization to which the sale is permitted by the proviso of "Class 3" of section 281-31 that is located on any Army, Navy, or Air Force reservation as described under section 237-25(a)(1);

(B) Tobacco products and cigarettes to the United States (including any agency or instrumentality thereof that is wholly owned or otherwise so constituted as to be immune from the levy of tax under chapter 238 or 245, but not including national banks) as described under section 237-25(a)(2); and

(C) "Other tangible personal property" to the United States (including any agency, instrumentality, or federal credit union thereof, but not including national banks) and any state-chartered credit union as described under section 237-25(a)(3);

(18) Amounts received by petroleum product refiners from other refiners for further refining of petroleum products as described under section 237-27;

(19) Gross proceeds received from the construction, reconstruction, erection, operation, use, maintenance, or furnishing of air pollution control facilities, as described under section 237-27.5, that do not have valid certificates of exemption on July 1, 2011;

(20) Gross proceeds received from shipbuilding and ship repairs as described under section 237-28.1;

(21) Amounts received by telecommunications common carriers from call center operators for interstate or foreign telecommunications services as described under section 237-29.8;

(22) Gross proceeds received by qualified businesses in enterprise zones, as described under section 209E-11, that do not have valid certificates of qualification from the department of business, economic development, and tourism on July 1, 2011; and

(23) Gross proceeds received by contractors licensed under chapter 444 for construction within enterprise zones performed for qualified businesses within the enterprise zones or businesses approved by the department of business, economic development, and tourism to enroll into the enterprise zone program, as described under section 209E-11.

(b) Except as otherwise provided under subsection (f), (g), or (h), there is levied, assessed, and collected annually against a taxpayer receiving or deriving previously exempt gross income or gross proceeds of sale from July 1, 2011[~~, to June 30, 2013~~], a tax at the rate of four per cent on that previously exempt gross income or gross proceeds of sale."

3. By amending the title and subsection (a) of section 238- , relating to temporary suspension of exemption of certain amounts; levy of tax, in section 3 to read:

""§238- [~~Temporary suspension~~] Suspension of exemption of certain amounts; levy of tax. (a) Notwithstanding any other law to the contrary, the exemption of the following from taxation under this chapter shall be suspended from July 1, 2011[~~, through June 30, 2013~~]:

(1) The leasing or renting of aircraft or keeping of aircraft solely for leasing or renting for commercial transportation of passengers and goods or the acquisition or importation of aircraft or aircraft engines by a lessee or renter engaged in interstate air transportation, as described under paragraph (6) of the definition of "use" in section 238-1;

(2) The use of oceangoing vehicles for passenger or passenger and goods transportation from one point to another within the State as a public utility, as described under paragraph (7) of the definition of "use" in section 238-1;

(3) The use of material, parts, or tools imported or purchased by a person licensed under chapter 237 that are used for aircraft service and maintenance or the construction of an aircraft service and maintenance facility, as described under paragraph (8) of the definition of "use" in section 238-1;

(4) The use or sale of intoxicating liquor and cigarette and tobacco products imported into the State and sold to any person or common carrier in interstate commerce, whether ocean-going or air, for consumption out of State by the person, crew, or passengers on the shipper's vessels or airplanes, as described under section 238-3(g);

(5) The use of any vessel constructed under section 189-25 prior to July 1, 1969, as described under section 238-3(h); and

(6) The use of any air pollution control facility [~~subject to~~] exempted by section 237-27.5 as described under section 238-3(k)."

4. By amending section 6 to read:

"SECTION 6. This Act shall take effect on July 1, 2011[~~, and shall be repealed on June 30, 2013~~]."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect on June 29, 2013.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1360
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII