STAND. COM. REP. NO. 2899

Honolulu, Hawaii

RE: S.B. No. 2489

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2489, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to update the formula used to determine the amount of transient accommodations tax to be collected from time shares.

More specifically, this measure amends the base on which time share occupancy is taxed from one-half of the gross daily maintenance fees that are paid by the owner and are attributable to the time share unit to an unspecified percentage of the gross daily maintenance fees.

Your Committee received written comments in opposition to this measure from ARDA-Hawaii; Hawaii Lodging and Tourism Association; Interval Leisure Group, Inc.; Kohala Coast Resort Association; Marriott Vacations Worldwide Corporation; Maui Hotel and Lodging Association; and Wyndham Vacation Ownership, Inc.

Your Committee received written comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

Your Committee finds that the tax formula for levying the transient accommodations tax on time share units has not been adjusted since the State began taxing time shares in 1998. Your Committee notes that, according to the Department of Taxation, updating the formula used to determine the amount of transient accommodations tax to be collected from time shares, in the manner set out in this measure, is projected to generate an estimated $20,200,000 in revenues for the general fund in fiscal year 2019, $22,800,000 in fiscal year 2020, $23,400,000 in fiscal year 2021, $24,100,000 in fiscal year 2022, $24,900,000 in fiscal year 2023, and $25,600,000 in fiscal year 2024.

Your Committee has amended this measure by:

(1) Changing the effective date from January 1, 2050, to upon approval; and

(2) Applying the measure to taxable years beginning after December 31, 2018.

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. 2489, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2489, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair