Establishes a general excise tax holiday for consumers and businesses for goods and services sold on condition that businesses pass the savings on to consumers.

A BILL FOR AN ACT

SECTION 1. The terrorist attacks of September 11, 2001 fostered far-reaching impacts throughout our national economy. President Bush' call to lead normal lives represents a reasoned response to combat the economic paralysis the terrorists hoped to instill within this country. Continuing in a normal fashion, however, is easier said than done. The purpose of this Act is to create an incentive to stimulate consumer spending within our economy and restoring levels of consumer spending to pre-September 11 levels.

For a period not to exceed three days, all sales would be exempt from the normal retail or general excise tax of four per cent. Because the tax is imposed on the seller rather than the buyer, the only requirement is that the tax savings be passed on to the consumer.

Tax holidays have been used successfully across the United States. For example, Texas lifted its 6.25 per cent state sales tax, along with all local sales taxes, on clothing and footwear. New York and Florida already have similar programs.

More importantly, tax holidays have been found to create sales. Many Texas retailers have reported seeing crowds usually seen only during the Christmas selling season. To accommodate all of the shoppers, stores in Texas adopted extended hours, added staff, and offered special promotions usually reserved for holidays. While depressed sales might be expected after a tax holiday, retailers have not noticed fewer sales after a sales spike.

A tax holiday would have the effect of stimulating retail sales and giving a boost to our recovering economy. A general excise tax holiday in Hawaii would help both consumers and retailers alike.

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

"§237-     Annual tax holiday. (a) Notwithstanding any law to the contrary, taxes under this chapter shall not be due on the sale of clothing or footwear if the sales price of the article is less than $100, if the sale takes place during the period beginning at 12:01 a.m. on the first Friday in November 2001 and ending at 12 midnight of the following Sunday; provided that all savings generated by this section shall be passed on by the seller to the purchaser. This exemption shall apply to retail sales only and not to sales on items that will be resold in any manner.

(b) The exemption provided in this section shall apply to each article of clothing or footwear that sells for less than $100, regardless of how many items are sold on the same invoice to a customer.

(c) The exemption provided in this section shall not apply to:

(d) Articles that are normally sold as a unit shall continue to be sold in that manner and shall not be priced separately and sold as individual items to obtain the exemption.

(e) If exempt clothing or footwear is sold together with taxable merchandise as a set or single unit, the full price shall be subject to tax unless the price of the exempt item is separately stated. When exempt clothing is sold in a set that also contains taxable merchandise as a free gift, the exempt clothing may qualify for the exemption.

(f) A retailer may offer discounts to reduce the sales price of an item. If the discount reduces the sales price to $99.99 or less, the item shall qualify for the exemption.

(g) The total price of items advertised as "buy one, get one free," or "buy one, get one for a reduced price," shall not be averaged for both items to qualify for the exemption.

(h) Shipping and handling charges shall be included as part of the sales price of the item.

(i) The retailer shall not be required to obtain any special license, permit, or other documentation on sales of eligible items during the exemption holiday period; provided that the retailer's records shall clearly identify the type of item sold, the date the item was sold, and the sales price of the item."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on upon approval.