STAND. COM. REP. NO. 1961

Honolulu, Hawaii

RE: H.C.R. No. 182

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.C.R. No. 182 entitled:

"HOUSE CONCURRENT RESOLUTION REQUESTING THAT THE TAX REVIEW COMMISSION CONSIDER CERTAIN GOALS FOR AN EQUITABLE, EFFICIENT, AND ADEQUATE TAX POLICY STRUCTURE IN ITS DELIBERATIONS,"

begs leave to report as follows:

The purpose and intent of this measure is to request that the Tax Review Commission consider certain goals for an equitable, efficient, and adequate tax policy structure in its deliberations.

More specifically, this measure requests that the Tax Review Commission consider the following goals for an equitable, efficient, and adequate tax policy structure:

(1) State and local tax policy that maximizes benefit to Hawaii taxpayers when considering provisions of the federal Internal Revenue Code;

(2) Weighing the impact of federal policies and activity on Hawaii taxpayers;

(3) Ensuring non-residents and visitors contribute fairly while minimizing impacts on residents;

(4) Gauging the effectiveness and appropriateness of all tax credits and exemptions pursuant to Hawaii law;

(5) Evaluating the positive or negative features and impacts of one-time versus recurring tax revenue sources; and

(6) Evaluating factors that affect revenue generation and the cost and effectiveness of enforcement activities.

Your Committee received testimony in support of this measure from The Chamber of Commerce of Hawaii and Hawaii Food Industry Association.

Your Committee finds that under Article VII, Section 3, of the Constitution of the State of Hawaii, the Tax Review Commission is required to submit to the Legislature an evaluation of the State's tax structure and recommend revenue and tax policy. Your Committee also finds that, in previous years, the Tax Review Commission has been guided by three primary principles of sound tax policy that include equity, efficiency, and adequacy where:

(1) Equity is a measurement of how tax burdens are distributed;

(2) Efficiency is a measure of the transaction costs of the tax system; and

(3) Adequacy is the ability of the tax system to produce enough revenue to fund government spending.

Accordingly, your Committee finds that this review will help to ensure that the tax system remains responsive to the State's economic needs.

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 concurs with the intent and purpose of H.C.R. No. 182, and recommends its adoption.

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

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DONOVAN M. DELA CRUZ, Chair