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DAVID Y.IGE o F RONA M.SUZUKI <br /> GOVERNOR DIRECTOR OF TAXATION <br /> JOSH GREEN M.D. yjft DAMIEN A.ELEFANTE <br /> LT.GOVERNOR ( I DEPUTY DIRECTOR <br /> e <br /> .o <br /> STATE OF HAWAII <br /> DEPARTMENT OF TAXATION <br /> P.O.BOX 259 <br /> HONOLULU,HAWAII 96809 <br /> PHONE NO:(808)587-1540 <br /> FAX NO:(808)587-1560 <br /> LAT14 <br /> J <br /> To: The Honorable Ryan I. Yamane, Chair; <br /> The Honorable Chris Todd,Vice Chair; <br /> and Members of the House Committee on Water, Land,& Hawaiian Affairs <br /> From: Rona M. Suzuki, Director <br /> Department of Taxation <br /> Re: H.B. 2578, Relating to Public Lands <br /> Date: Wednesday, February 12, 2020 <br /> Time: 10:30 A.M. <br /> Place: Conference Room 325, State Capitol <br /> The Department of Taxation (Department) appreciates the intent of this measure and <br /> provides the following comments regarding H.B. 2578. <br /> Among other things,H.B. 2578 exempts the costs of construction work or improvements of <br /> a redevelopment project from general excise (GET) and use taxes. The measure is effective on the <br /> later of the date that the county of Hawaii repeals the Banyan Drive Hawaii redevelopment agency, <br /> or July 1, 2020. <br /> Section 11,which creates a new GET exemption, should be clarified. It appears that the <br /> intent is to exempt gross receipts from "contracting" related to a redevelopment project. Because <br /> the term "contracting"is already defined in section 237-6, Hawaii Revised Statutes (HRS), and <br /> include the activities described in "construction of work or improvements of a redevelopment <br /> project," the Department recommends using the term "contracting."In addition, the Department <br /> suggests adding a GET exemption that corresponds to the use tax exemption in Section 12 (see <br /> analysis below). As such, the Department suggests Section 11 to read as follows: <br /> §237- Redevelopment project. (a) This chapter <br /> shall not apply to amounts received for: <br /> (1) Contracting relating to a redevelopment <br /> project that is part of the redevelopment <br /> plan adopted by a local redevelopment agency <br /> pursuant to chapter 53; and <br /> (2) Sale of materials, parts, or tools used in <br /> contracting as described in paragraph (1) . <br /> (b) For the purpose of this section, "local <br /> redevelopment agency", "redevelopment plan", and <br /> "redevelopment project" shall have the same meaning as <br /> defined in section 53-1 . <br /> Section 12 amends the use tax under chapter 238, HRS, by exempting from the tax "[t]he <br />