STAND. COM. REP. NO. 161

Honolulu, Hawaii

RE: S.B. No. 1158

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Education, to which was referred S.B. No. 1158 entitled:

"A BILL FOR AN ACT RELATING TO SCHOOL SUPPLIES,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a general excise tax holiday for consumers and businesses for school supplies sold during the weekend prior to the start of the school year on condition that businesses pass the savings on to consumers.

Your Committee received testimony in support of this measure from the Hawaii State Teachers Association and one individual. Your Committee received comments on this measure from the Department of Taxation, Department of Education, Department of the Attorney General, and Tax Foundation of Hawaii.

Your Committee finds that Hawaii taxpayers are some of the most overburdened taxpayers in the nation. This burden is most severe when consumers are taxed on critical items needed for school. Additionally, several states have temporary state sales tax holidays. A school supply tax holiday would have the effect of stimulating retail sales and help consumers and retailers alike. This measure allows for residents of this State to retain more of their money to spend in more beneficial ways.

Your Committee has amended this measure by:

(1) Specifying that the school supply tax holiday shall take place on the weekend two weeks, rather than one week, prior to the first day of public school;

(2) Deleting language that would have prohibited the exemption of the general excise tax for mail, telephone, electronic mail, or internet orders with businesses operating outside the State;

(3) Specifying that the general excise tax holiday shall apply to businesses operating with a general excise tax license from the Department of Taxation;

(4) Expanding the definition of "school supply" to include textbooks; and

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

As affirmed by the record of votes of the members of your Committee on Education that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1158, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1158, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Education,

________________________________

MICHELLE N. KIDANI, Chair