HOUSE OF REPRESENTATIVES

H.B. NO.

1990

THIRTIETH LEGISLATURE, 2020

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that the department of education faces educational infrastructure issues caused by overcapacity and underfunding, while the highways division of the department of transportation faces a threat of inundation and damage to the state highway system caused by climate change.  The legislature also finds that certain state funds will need an additional, temporary source of moneys in the future.

     The purpose of this Act is to:

     (1)  Permanently direct specified percentages of general excise tax revenues to a new educational infrastructure special fund for the department of education and other entities responsible for school facilities to strengthen its infrastructure and to the department of transportation for the costs of protecting the state highway system from the threat of damage caused by climate change;

     (2)  Establish a temporary state improvement surcharge on the general excise tax and use tax; and

     (3)  Direct specified percentages of state improvement surcharge revenues to the purposes in paragraph (1) and to the compound interest bond reserve fund, the hurricane reserve fund, and the separate trust fund established under section 87A-42.

     SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§237-     State improvement surcharge.  (a)  From January 1, 2031, to December 31, 2035, a state improvement surcharge shall be levied, assessed, and collected as provided in this section on all gross proceeds and gross income taxable under this chapter.  The state improvement surcharge shall be set at a rate equal to one-half per cent of all gross proceeds and gross income taxable under this chapter.  All provisions of this chapter shall apply to the state improvement surcharge.  With respect to the surcharge, the director of taxation shall have all the rights and powers provided under this chapter.

     (b)  The state improvement surcharge shall be imposed on the gross proceeds or gross income of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross proceeds or gross income are received as payments beginning in the taxable year in which the taxes become effective, on contracts entered into before June 30 of the year prior to the taxable year in which the taxes become effective, and the written contracts do not provide for the passing on of increased rates of taxes, the state improvement surcharge shall not be imposed on the gross proceeds or gross income covered under the written contracts.  The state improvement surcharge shall be imposed on the gross proceeds or gross income from all contracts entered into on or after June 30 of the year prior to the taxable year in which the taxes become effective, regardless of whether the contract allows for the passing on of any tax or any tax increases.

     (c)  No state improvement surcharge shall be established on any:

     (1)  Gross income or gross proceeds taxable under this chapter at the one-half per cent tax rate;

     (2)  Gross income or gross proceeds taxable under this chapter at the 0.15 per cent tax rate; or

     (3)  Transactions, amounts, persons, gross income, or gross proceeds exempt from tax under this chapter.

     (d)  The director of taxation shall revise the general excise tax forms to provide for the clear and separate designation of the imposition and payment of the state improvement surcharge.

     (e)  All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective.  Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year."

     SECTION 3.  Chapter 238, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§238-     State improvement surcharge.  (a)  From January 1, 2031, to December 31, 2035, a state improvement surcharge shall be levied, assessed, and collected as provided in this section on the value of property and services taxable under this chapter.  The state improvement surcharge shall be set at a rate equal to one-half per cent of the value of property taxable under this chapter.  All provisions of this chapter shall apply to the state improvement surcharge.  With respect to the surcharge, the director of taxation shall have all the rights and powers provided under this chapter.

     (b)  No state improvement surcharge shall be established upon any use taxable under this chapter at the one-half per cent tax rate or upon any use that is not subject to taxation or that is exempt from taxation under this chapter.

     (c)  The director of taxation shall revise the use tax forms to provide for the clear and separate designation of the imposition and payment of the state improvement surcharge.

     (d)  All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective.  Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year."

     SECTION 4.  Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§302A-     Educational infrastructure special fund.  There is established within the state treasury a special fund, into which shall be deposited all revenues collected pursuant to sections 237-31(a)(4) and 238-14(b)(4).  Moneys deposited into this fund shall be expended for the purposes of the department of education or any other entity responsible for school facilities to augment the capacity and infrastructure of its facilities and programs."

     SECTION 5.  Section 237-31, Hawaii Revised Statutes, is amended to read as follows:

     "§237-31  Remittances.  (a)  All remittances of taxes imposed by this chapter shall be made by money, bank draft, check, cashier's check, money order, or certificate of deposit to the office of the department of taxation to which the return was transmitted.  The department shall issue its receipts therefor to the taxpayer and, except for moneys collected pursuant to section 237‑   , shall pay the moneys into the state treasury as a state realization, to be kept and accounted for as provided by law; provided that:

     (1)  A sum, not to exceed $5,000,000, from all general excise tax revenues realized by the State shall be deposited in the state treasury in each fiscal year to the credit of the compound interest bond reserve fund;

     (2)  A sum from all general excise tax revenues realized by the State that is equal to one-half of the total amount of funds appropriated or transferred out of the hurricane reserve trust fund under sections 4 and 5 of Act 62, Session Laws of Hawaii 2011, shall be deposited into the hurricane reserve trust fund in fiscal year 2013-2014 and in fiscal year 2014-2015; provided that the deposit required in each fiscal year shall be made by October 1 of that fiscal year; [and

  [](3)[]]  Commencing with fiscal year 2018-2019, a sum from all general excise tax revenues realized by the State that represents the difference between the state public employer's annual required contribution for the separate trust fund established under section 87A-42 and the amount of the state public employer's contributions into that trust fund shall be deposited to the credit of the State's annual required contribution into that trust fund in each fiscal year, as provided in section 87A-42[.];

     (4)  A sum equal to 0.25 per cent of all general excise tax revenues realized by the State shall be deposited into the educational infrastructure special fund established in section 302A‑    for the department of education or any other entity responsible for school facilities to augment the capacity and infrastructure of its facilities and programs; and

     (5)  A sum equal to 0.25 per cent of all general excise tax revenues realized by the State shall be deposited into the state highway fund established in section 248-8 to protect the state highway system from the threat of inundation and damage caused by climate change.

     (b)  State improvement surcharge revenues realized by the State, that were levied, assessed, or collected from January 1, 2031, to December 31, 2035, pursuant to section 237-    shall be distributed as follows:

     (1)  Twenty per cent shall be allocated to the compound interest bond reserve fund;

     (2)  Twenty per cent shall be allocated to the hurricane reserve trust fund;

     (3)  Twenty per cent shall be allocated to the separate trust fund established under section 87A-42;

     (4)  Twenty per cent shall be allocated to the educational infrastructure special fund established pursuant to section 302A‑   ; and

     (5)  Twenty per cent shall be allocated to the state highway fund established in section 248-8 to protect the state highway system from the threat of inundation and damage caused by climate change."

     SECTION 6.  Section 238-14, Hawaii Revised Statutes, is amended to read as follows:

     "§238-14  Taxes state realizations.  (a)  All taxes collected under this chapter shall be state realizations.

     (b)  State improvement surcharge revenues realized by the State that were levied, assessed, or collected from January 1, 2031, to December 31, 2035, pursuant to section 238‑    shall be distributed as follows:

     (1)  Twenty per cent shall be allocated to the compound interest bond reserve fund;

     (2)  Twenty per cent shall be allocated to the hurricane reserve trust fund;

     (3)  Twenty per cent shall be allocated to the separate trust fund established under section 87A-42;

     (4)  Twenty per cent shall be allocated to the educational infrastructure special fund established pursuant to section 302A‑   ; and

     (5)  Twenty per cent shall be allocated to the state highway fund established in section 248-8 to protect the state highway system from the threat of inundation and damage caused by climate change."

     SECTION 7.  Section 248-9, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Moneys in the state highway fund may be expended for the following purposes:

     (1)  To pay the costs of operation, maintenance, and repair of the state highway system, including without limitation, the cost of equipment and general administrative overhead;

     (2)  To pay the costs of acquisition (including real property and interests therein), planning, designing, construction, and reconstruction of the state highway system and bikeways, including, without limitation, the cost of equipment and general administrative overhead;

     (3)  To reimburse the general fund for interest on and principal of general obligation bonds issued to finance highway projects where the bonds are designated to be reimbursable out of the state highway fund; [and]

     (4)  To pay the costs of construction, maintenance, and repair of county roads; provided that none of the funds expended on a county road or program shall be federal funds when such expenditure would cause a violation of federal law or a federal grant agreement[.]; and

     (5)  To pay the costs of protecting the state highway system from the threat of inundation and damage caused by climate change."

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on July 1, 2050.

 

 

Report Title:

General Excise Tax; Use Tax; DOE; DOT; State Improvement Surcharge

 

Description:

Permanently directs specified percentages of the general excise tax revenues to a new educational infrastructure special fund for the department of education and other entities responsible for school facilities to augment its capacity and infrastructure and to the department of transportation to protect the state highway system from the threat of inundation and damage caused by climate change.  Directs specified percentages of revenues from a new, temporary state improvement surcharge to the foregoing purposes and to certain state funds.  Takes effect on 7/1/2050.  (HD1)

 

 

 

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