STAND. COM. REP. NO. 2291

Honolulu, Hawaii

RE:    S.B. No. 2695

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs, to which was referred S.B. No. 2695 entitled:

"A BILL FOR AN ACT RELATING TO COUNTY SURCHARGE TAX,"

beg leave to report as follows:

     The purpose and intent of this measure is to repeal the law relating to the disposition of proceeds from the county surcharge on state tax.

     Your Committees received comments on this measure from the Department of the Attorney General and Tax Foundation of Hawaii.

     Your Committees find that the ten percent deduction for administrative expenses from the proceeds of the county surcharge on state tax is speculated to be far in excess of the actual costs to the State in collecting the tax on behalf of the counties.  Your Committees further find that measures to ascertain the actual cost incurred by the Department of Taxation to assess, collect, and dispose of the surcharge revenues should be undertaken so that a revenue neutral impact to the Department can be implemented.

     Your Committees have amended this measure by:

     (1)  Deleting its purpose section;

     (2)  Reinstating provisions relating to the disposition of the proceeds on the county surcharge but clarifying that the State's administrative share shall be the costs of assessment, collection, and disposition rather than ten percent of the proceeds; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2695, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2695, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs,

________________________________ CLARENCE K. NISHIHARA, Chair

________________________________ LORRAINE R. INOUYE, Chair