STAND. COM. REP. NO. 676

Honolulu, Hawaii

RE: S.B. No. 1278

S.D. 1

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 S.B. No. 1278 entitled:

"A BILL FOR AN ACT RELATING TO THE GENERAL EXCISE TAX,"

begs leave to report as follows:

The purpose and intent of this measure is to provide tax relief to businesses impacted by the coronavirus disease 2019 (COVID-19) pandemic.

More specifically, this measure:

(1) Exempts from the state general excise tax any grants received by an eligible business from the federal Restaurant Revitalization Fund pursuant to the American Rescue Plan Act of 2021; and

(2) Requires any state general excise taxes paid by eligible businesses for Restaurant Revitalization Fund grants to be refunded to the taxpayer.

Your Committee received testimony in support of this measure from Bev Gannon Restaurants; The Chamber of Commerce of Hawaii; Grassroot Institute of Hawaii; Hawaii Bar Owners Association / E&J Lounge Operating Co.; Hawaii Restaurant Association; Highway Inn; Island Catering, LLC; Jesscott, Inc., dba. Lava Java Coffee Roasters of Maui; Maui Brewing Co.; Maui Brewing Co. Restaurants; Maui Chamber of Commerce; Maui Wine, Ltd.; Merriman's Restaurants; Roy Yamaguchi Group of Restaurants; Tiki's Grill & Bar; and three individuals.

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

Your Committee finds that, pursuant to the American Rescue Plan Act of 2021, the federal Restaurant Revitalization Fund was established to provide grants to food and beverage businesses that experienced revenue loss related to the COVID-19 pandemic. Your Committee also finds that, in light of the severity of the economic impact of the COVID-19 pandemic, certain funds received pursuant to relief programs established under the Coronavirus Aid, Relief, and Economic Security Act are exempt from the state general excise tax. Your Committee further finds that this exemption does not apply to grants received by an eligible business from the federal Restaurant Revitalization Fund pursuant to the American Rescue Plan Act of 2021, despite the fact that these grants were established to provide similar relief. This measure corrects that disparity.

Your Committee has amended this measure by:

(1) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure;

(2) Clarifying that the measure shall apply retroactively to March 11, 2021; and

(3) Correcting a spelling error.

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. 1278, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1278, S.D. 1, and be placed on the calendar for Third Reading.

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

________________________________

DONOVAN M. DELA CRUZ, Chair