STAND. COM. REP. NO. 2852

Honolulu, Hawaii

RE: S.B. No. 2868

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. 2868, 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 improve the collection of the transient accommodations tax.

More specifically, this measure amends the definition of "gross rental" or "gross rental proceeds", as used in the transient accommodations tax law, to apply the transient accommodations tax to the share of proceeds received by transient accommodations brokers, travel agencies, and tour packagers in noncommissioned transactions.

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

Your Committee finds that, under current law, when transient accommodations are sold through a transient accommodations broker, travel agency, or tour packager at a noncommissioned negotiated contract rate, the transient accommodations tax is only imposed on the share of the proceeds received by the operator of the transient accommodation. Your Committee also finds that the intent of this measure is to create parity by also applying the transient accommodations tax to the share of proceeds received by the transient accommodations broker, travel agency, or tour packager. However, as currently drafted, the measure only applies the transient accommodations tax to the share of proceeds received by the transient accommodations broker, travel agency, or tour packager, and not the share received by the operator of the transient accommodation.

Your Committee has amended this measure by:

(1) Adding provisions to ensure that the transient accommodations tax is applied to the respective shares of proceeds received by operators of transient accommodations, as well as transient accommodations brokers, travel agencies, and tour packagers, in noncommissioned transactions;

(2) Amending section 237D-2, Hawaii Revised Statutes, to explicitly impose the transient accommodations tax on transient accommodations brokers, travel agencies, and tour packagers;

(3) Inserting a new section into Chapter 237D, Hawaii Revised Statutes, that requires transient accommodations brokers, travel agencies, and tour packagers to register with the Department of Taxation and pay a $15 registration fee; and

(4) Specifying that Chapter 237D, Hawaii Revised Statutes, applies to transient accommodations brokers, travel agencies, and tour packagers in the same manner as it applies to operators of transient accommodations.

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. 2868, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2868, 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