HomeMy WebLinkAboutCOM 0378.000 2002-2004 +TV os N.~
~.'v
CARYSAFARIK Phone: (808)961-8267
Ca~ncilnffind~o Fax: (SOS) 961-8912
~ O~~M~+'
gsafarik~interpaane[
County Council
Caunly of Hawni `i
Hawni? County &iilAiag
25 Aupuni Stree/
Hiln, Nrtwni'i 96710 p
W
~n O
-Ti
z r --i Ti
~ _ 1-~
. -L
October 14, 2003 _ s
~
-
r,
o LJ
TO: Chairman James Y. Arakaki ~ ~ ~ ~
and All Councilmembers
FROM: Gary Safarik, Vice-Chair
Hawaii State Association of Counties
Attached you will find a summary of proposed Bill 1554. Please review it and
share with me your thoughts and concerns.
Comm. No. 37g
Ref. To:
Ref. Date 1 4 ~nnz
Summary of Proposed Bill
The proposed bill authorizes the counties to establish a general excise tax on the retail
sales of tangible personal property. The bill is drafted to attempt to avoid conflict with the
Streamlined Sales and Use Tax Agreement by applying it only to retail sales of tangible
personal property in Hawaii.
The authority to establish a use tax was deleted. The use tax is an excise tax on the use of
tangible personal property "which is imported' or purchased from an unlicensed seller, for
use in this State.
The bill provides that a county shall establish the general excise tax by ordinance. A
county general excise tax cannot be established on:
(1) Sales taxable at the one-half per cent rate under Chapter 237
(manufacturers and wholesalers);
(2) Sales taxable at the 0.15 per cent rate under Chapter 237 (insurance
solicitors and agents);
(3) Service businesses;
(4) Sales from interstate or foreign commerce;
(5) Sales exempt from Chapter 237.
Defines "retail sales of tangible personal property" as the sale of tangible personal
property for consumption or use by the purchaser and not for resale. "Tangible personal
property" is defined as personal property that can be seen, weighed, measured, felt, or
touched, or that is in any other manner perceptible to the senses. (Tangible personal
property uses the definition from the Streamlined Sales and Use Tax Agreement, except
that the Agreement's definition also includes electricity, water, gas, steam, and prewritten
computer software.)
A county enacting an excise tax ordinance shall notify the Director of Taxation within ten
days of enactment. The Director of Taxation shall levy, assess, collect, and administer the
county general excise tax. The bill provides that the Director shall have until January ls`
after the ordinance is enacted to prepare to implement the tax. The Tax Department is
authorized to retain 5 per cent of the taxes collected for its administrative costs.
The bill amends the distribution of the transient accommodation tax revenues if a county
with a population of two hundred thousand of more enacts a county general excise tax. It
removes the cap on revenues deposited into the Convention Center Enterprise Special
Fund and increases the percentage deposited to the Tourism Special Fund to 36.6 per cent
and changes the amount distributed to the counties to 40.8 per cent. It divides the City and
County of Honolulu portion equally among the remaining counties: Kauai County
receiving 29.2 per cent; Hawaii County receiving 33.3 per cent; and Maui County
receiving 37.5 per cent. (Using the Council of Revenues projections for FY04-OS: Kauai
County would receive $24, 700,284; Hawaii County would receive $28,168,475; and
Maui County would receive $31, 721, 256.)
If more than one county establishes the county general excise tax, transient
accommodations tax revenues are distributed as follows:
(1) 20.0 per cent to the Convention Center Enterprise Special Fund (This should
amount to about $35 million);
(2) 40.0 per cent to the Tourism Special Fund (This should amount to about $70
million);
(3) 15.0 per cent to each county not establishing a county general excise tax (This
amounts to about $26.25 million. If only the City and County of Honolulu enacts
the tax, under subsection (c) the other counties would receive between 13 per and
16 per cent of the total TAT revenues.); and
(4) Moneys remaining after the revenues are distributed above, shall be credited to the
general fund.
The bill makes an appropriation to the Department of Taxation to carry out the Act, which
shall be reimbursed by the county enacting the general excise tax ordinance.
.B. NO.
A BILL FOR AN ACT
RELATING TO COUNTY TAXES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
1 SECTION 1. Section 46-16.7, Hawaii Revised Statutes, is
2 amended to read as follows:
3 "§46-16.7 County general excise tax. [-~''-"~`-x
q a~~t_=.g?-] (a) Each county, except the county of Kalawao, may
5 establish a general excise tax [---~a~ "F -
6 on the gross proceeds of retail sales of
7 tangible personal property. Each county shall establish the
8 general excise tax [ate "~~~=a=sue] by ordinance.
9 [ '
10
11 ~ ~ '
12
13
14
15
16
17
countytax6.doc
Page t . ~ . N O .
1
2 ~L~t ksr~aFSSaa-rad hi t!~? ` y... y . ]
3 (b) Each county shall notify the director of taxation
4 within ten days after the county has adopted a general excise
5 tax [-~-a~e-~x fie] ordinance, and the director of
6 taxation shall levy, assess, collect, and otherwise administer
7 the general excise tax [and ' ] for the next
8 taxable year beginning [
9 ,
10 on the first day of January.
12 o ~ t.., L t, v. ~ i i.... a r
1 `r
13 rl l Th P-~i td ~nfi l F ~ s w s s t.
14
15
16
17
18
19
20 ,
22
county tax6.doc
Page 3 . ~ . ~ O .
1 ~~eh#ng ~'e~t~€~'ements ~'he c~-i-~e~A~c3~-€€nanee~~~
2
3
5 €e3~eea~ng t-he , ~ the €€~d€~gs ~'te a~~
6
7 L~ '
8
9
10 Beeemhe~ 3};~}9~, a~
ll -E-BT-~t-.,`~ se~ee --a
12
13 that the sk~eha~ge 's-€n a€€eet 's ae
14
15
16 ESPY r~rmin~ti n_ mot, a F i..
I8
19
20 a €-~ea~i ~~g~d t~'a~s€t
21 a,.___:..ed~rte the ~v....,..._ .
22
county tax6.doc
Page 4 . ~ . ~ O .
~ : L. L.
2 yez~-tea €he -~gg~e~a€e dtt~~ng the
3 ~ ~ " eeted €n the €e~m e€ an e~
4 tam-eyed#t the ameun'- -F t'~~ -~-a: t '~e a ~~=rcri-gyres
5
6 F3~ '£~e-ge~a}~3ee€se artF1 tree ta3F st~~e3'ta~ge
7 a, r
r r l
8 a~} at~~he~€$~-~-tg€taz-assts-e€ the~,~a
9 _
N.. y.,.~Y
10 L. /n\ L....,,. L..... ..l l,...~,.a ~.a a: J,__.r_v
11
12 c"T "'he eeant€ee e€ l~abaa= = Irat~a€~nd ~Iars~ she-} nee-~`r
13 st3~e~a~ges €e~-~~t~~e ,
14 ,
15 deve~egnteat, arm-gales, ~
16 ma~ntenane•e;~n€-~ast~tiettt~e, r,u~-~~-
18
19 e~s~=c~et a tans€t €ae€}~t~+-ems 9'p`stem, }I32 }~3Qiixy^ Qenc 9civrcc,
20 ..F ,and aega~s~t~en and seve~e~ment, -F
21 ,
22
county tax6.doc
Page 5 . ~ . ~ O .
1 E+~~~se~ree~~~e~.rall €t~nds, ea~reee.~,~ie~s-
2 ,
3 ,
4
s •l
6 (c) No county general excise tax shall be established on
7 anY:
S (1) Gross income or gross proceeds taxable under chapter
9 237 at the one-half per cent tax rate;
10 (2) Gross income or gross proceeds taxable under chapter
it 237 at the 0.15 per cent tax rate;
12 (3) Gross income or gross proceeds taxable under section
13 237-13(6);
14 (4) Gross income or gross proceeds of sales of tangible
15 personal property in interstate or foreign commerce;
16 or
17 (5) Transactions, amounts, persons, gross income, or gross
lg proceeds exempt from tax under chapter 237.
19 (d) As used in this section:
20 "Retail sales of tangible personal property" means the
21 sale of tangible personal property for consumption or use
22 by the purchaser and not for resale.
county tax6.doc
Page 6 . ~ . N O .
1 "Tangible personal property" means personal property
2 that can be seen, weighed, measured, felt, or touched, or
3 that is in any other manner perceptible to the senses."
4 SECTION 2. Section 237-8.5, Hawaii Revised Statutes, is
5 amended to read as follows:
6 "237-8.5 County general excise tax; [-a;e
7 =o~=arY~,] administration. (a) The county general excise tax
g [g,~-asc ~ ,,,.rc'.:crgc, ] upon the adoption of county ordinances
9 under section 46-16.7, shall be levied, assessed, and collected
10 as provided in this section on all gross proceeds and gross
11 income of the retail sale of tangible personal property taxable
12 under this chapter at the four per cent tax rate.
13
14
15 All
16 provisions of this chapter shall apply to the county general
17 excise tax ~_-='erg-; ] and with respect to the
1g [~~-_,t,--.-~~-°g~; ] county general excise tax, the director shall have
19 all the rights and powers provided under this chapter. In
20 addition, the director of taxation shall have the exclusive
21 rights and power to determine the county or counties in which a
22 person is engaged in business and, in the case of a person
county tax6.doc
Pagel NO.
1 engaged in business in more than one county, the director shall
2 determine through apportionment or other means, that portion of
3 the county general excise tax [-_-a ____'.c_g_J
4 attributable to business conducted in each county.
~ ~ y
6 -depted-garsua~r~-€e-see€ie~ 466 7 (-a~ shall be , ~ -a _ -F
7 , ,
8 €~•sngl3~ceember 3~~99~, __r~ :'_c''.
9 Eel ~'he-eeu~j~-gene~a~ epee€se ar~d tsse tee sa~•e3~arge
10
11
12 t~kis~rap~t:e~; ~~evided that
13 rirevi.,2-3ic ~'e ee ~ye~ as~d'~F[neirts a€ter ~eee",.m2~' 3~~~9~, er3
14 e-o~~s-catered rote be€are~une~nT48, ~a~ t~:ari~t-~~x
15 ae 33et~3^ev~de €e3: t3~e-gals#ng e~ e€ ine--eased-~a~~s
16 ,
17 _ y-_-"'a y__-^aPCI~ ~r c~r~~ 9n~n..._
18 mzczci txie tld~Y-tte33 e633t 3`aet9. '£he e61333t~~eI3e3"a~ e3Ee~se „-caza-u
sc
20 zz:ceirt~€rocTc cazi ceixti: cact9 e33te3`e~ ~33t6 033 6i` 3€terali33e~'
21 _~~^^~,~,.~i.,._~ er nett thy-e~c~3fi~~t a~lflw9 €~r the ;:_,__~_T;_~___~ ___F
/ - 1 J
22
county tax6.doc
Page 8 . ~ . A' O .
1 /a1 -.l ~a ti-... .,.,..L-. .-.L ..11 L...
2 L. l L... a j. .
3
4
5 ~ a 4 , v, l a t.
6
7
g
9 (b) The director of taxation shall revise the general
-lo- excise tax forms to provide for the clear and separate -
11 designation of the imposition and payment of the county general
12 excise -tax. ~~h~~ ]
13 The taxpayer shall designate the taxation district to which
14 the county general excise tax [~a~ ^_v~--~,-~=] is
15 assigned in accordance with rules adopted by the director of
16 taxation under chapter 91. The taxpayer shall file a schedule
17 with the taxpayer's periodic and annual general excise and use
18 tax returns summarizing the amount of taxes assigned to each
19 taxation district.
20 The penalties provided by section 231-39 for failure to
21 file a tax return shall be imposed on the amount of [c•_°~.°~=]
22 county general excise tax due on the return being filed for the
county tax6.doc
Page 9 . ~ . N 0 .
1 failure to file the schedule required to accompany the return.
2 In addition, there shall be added to the tax an amount equal to
3 ten per cent of the amount of the [°_°_-~_g_=] county general
4 excise tax [m-~-ia~s] due on the return being filed for failure
5 to file the schedule or the failure to correctly report the
6 assignment of the general excise tax by taxation district on the
7 schedule required under this subsection.
8 [ icy r~ i ...t... c. ~ _ ~n '3 £ir a-al dater h~~' h
9 P1--~'~•-ar er~ds~€te~Beeetnber 3~-3-99, er a€€e- Beeembe~~'r-
r___
11 , ,
~e a 9~3Br~ E3Pr1 C3 _
12 -a~' t axeaye~s arrarse € - ' _ a _
13 rcc~ci,iv= t =e-pe~ied star€#ng a€te~Beee~~ 3-I~99~, a~
14 ,
15 ~eee,~e~' 'rte-~96~, a~ ending be€ere dariaa-r~ri86r
r 7 a.... emu.
16 n}} menth annt~a-wand amertded~-ccarxx.~ aac ¢ixcnrczzxo
17 e~Ee~€er a~~eried~~eeed~~~danr~ar~~l, X983,
.-~x-~
18 .~aarTrittea to t~ke department a~te~Beeember 33, ~99~, 5~3u}}
19
20 excise-and t~se tax s~zrei~a~ge that maybe dt~e ' .a
r___
Zl , ]
county tax6.doc
Page 10 . ~ . w ' O .
1 (c) The department of taxation may retain five per cent of
2 the amount assessed and collected on behalf of a county as
3 reimbursement for the costs of the assessment and collection
4 incurred by the State."
5 SECTION 3. Section 237D-5.5, Hawaii Revised Statutes, is
6 amended by amending subsection (a) to read as follows:
7 ~~(a) There is established in the state treasury the
8 transient accommodations tax trust fund to be administered by
9 the director of finance, into which shall be deposited the
10 revenues prescribed by section 237D-6.5(b)[-] and (c)."
it SECTION 4. Section 237D-6.5, Hawaii Revised Statutes, is
12 amended to read as follows:
13 ~~§237D-6.5 Remittances; distribution to counties. (a) All
14 remittances of taxes imposed under this chapter shall be made by
15 cash, bank drafts, cashier's check, money order, or certificate
16 of deposit to the office of the taxation district to which the
17 return was transmitted.
18 (b) Revenues collected under this chapter shall be
19 distributed as follows:
20 (1) 17.3 per cent of the revenues collected under this
21 chapter shall be deposited into the convention center
22 enterprise special fund established under section
county tax6.doc
Page 11 . ~ . ~ O .
1 201B-8; provided that beginning January 1, 2002, if
2 the amount of the revenues collected under this
3 paragraph exceeds $31,000,000 in any calendar year,
4 revenues collected in excess of $31,000,000 shall be
5 deposited into the general fund;
6 (2) 32.6 per cent of the revenues collected under this
7 chapter shall be deposited into the tourism special
8 fund established under section 201B-11 for tourism
9 promotion and visitor industry research; provided that
10 beginning July 1, 2002:
11 (A) If the amount of revenues deposited into the
12 tourism special fund exceeds $62,292,000 in any
13 fiscal year, of the first $1,000,000 in revenues
14 deposited in excess of $62,292,000:
15 (i) Ninety per cent shall be deposited into
16 the state parks special fund established
17 in section 184-3.4; and
18 (ii) Ten per cent shall be deposited into the
19 special land and development fund
20 established in section 171-19 for the
21 Hawaii statewide trail and access program;
county tax6.doc
Page 12 . ~ . w ' O .
1 Provided that the total amount deposited into the
2 state parks special fund and to the special land
3 and development fund for the Hawaii statewide
q trail and access program shall not exceed
5 $1,000,000 in any fiscal year;
6 (3) 44.8 per cent of the revenues collected under this
7 chapter shall be transferred as follows: Kauai county
g shall receive 14.5 per cent, Hawaii county shall
9 receive 18.6 per cent, city and county of Honolulu
10 shall receive 44.1 per cent, and Maui county shall
11 receive 22.8 per cent; and
12 (6) 5.3 per cent of the revenues collected under this
13 chapter shall be deposited into the transient
14 accommodations tax trust fund established under
15 section 237D-5.5.
16 All transient accommodations taxes shall be paid into the
17 state treasury each month within ten days after collection, and
18 shall be kept by the state director of finance in special
19 accounts for distribution as provided in this subsection.
20 (c) If a county general excise tax is established and
21 implemented by the department for a county with a population of
22 two hundred thousand or more pursuant to section 46-16.7,
county tax6.doc
Page 13 . ~ . ~ O .
1 revenues collected under this chapter shall be distributed as
2 follows:
3 (1) 17.3 per cent of the revenues collected under this
4 chapter shall be deposited into the convention center
5 enterprise special fund established under section
6 201B-8;
7 (2) 36.6 per cent of the revenues collected under this
8 chapter shall be deposited into the tourism special
9 fund established under section 201E-11 for tourism
to promotion and visitor industry research; provided that
11 if the amount of revenues deposited into the tourism
12 special fund exceeds $62,292,000 in any fiscal year
13 of the first $1,000,000 in revenues deposited in
14 excess of $62,292,000:
15 (i) Ninety per cent shall be deposited into the
16 state parks special fund established in section
17 184-3.4; and
IS (ii) Ten per cent shall be deposited into the
19 special land and development fund established
20 in section 171-19 for the Hawaii statewide
21 trail and access program;
county tax6.doc
Page 14 . ~ . A' O .
1 provided that the total amount deposited into the
2 state parks special fund and to the special land
3 and development fund for the Hawaii statewide
4 trail and access program shall not exceed
5 $1 000 000 in any fiscal year;
6 (3) 40 8 per cent of the revenues collected under this
7 chapter shall be transferred as follows:
g (A) Kauai county shall receive 29.2 per cent;
9 (B) Hawaii county shall receive 33.3 per cent; and
10 (C) Maui county shall receive 37.5 per cent; and
it (4) 5 3 per cent of the revenues collected under this
12 chapter shall be deposited into the transient
13 accommodations tax trust fund established under
14 section 237D-5.5.
15 All transient accommodations taxes shall be paid into the
16 state treasury each month within ten days after collection, and
17 shall be kept by the state director of finance in special
18 accounts for distribution as provided in this subsection.
19 (d) If more than one county establishes and implements a
20 county general excise tax pursuant to section 46-16.7, revenues
21 collected under this chapter shall be distributed as follows:
county tax6.doc
Page 15 ' ~ , w , O .
1 (1) 20.0 per cent of the revenues collected under this
2 chapter shall be deposited into the convention center
3 enterprise special fund established under section
4 201B-8;
5 (2) 40.0 per cent of the revenues collected under this
6 chapter shall be deposited into the tourism special
7 fund established under section 201B-11 for tourism
S promotion and visitor industry research; provided .that
9 $1,000,000 of the revenues deposited into the tourism
to special fund shall be distributed as follows:
11 (i) Ninety per cent shall be deposited into the
12 state parks special fund established in section
13 184-3.4; and
14 (ii) Ten per cent shall be deposited into the
15 special land and development fund established
16 in section 171-19 for the Hawaii statewide
17 trail and access program;
18 provided that the total amount deposited into the
19 state parks special fund and to the special land and
20 development fund for the Hawaii statewide trail and
21 access program shall not exceed $1,000,000 in any
22 fiscal year;
county ra..c a--
Page 16 . ~ . w i O .
1 (3) 15.0 per cent of the revenues collected under this
2 chapter shall be transferred to each of the counties
3 that have not established a county general excise tax
4 pursuant to section 46-16.7; and
5 (4) Any moneys remaining of the revenues collected under
6 this chapter after distribution as provided in this
7 subsection shall be credited to the general fund.
g [-(t~-] (e} On or before January or July i of each year or
9 after the disposition of any tax appeal with respect to an
to assessment for periods after June 30, 1990,~the state director
of finance shall compute and pay the amount due as provided in
]2 ~ subsections (b),(c), and (d) to the .director of
]3 finance of each county to become a general realization of the
14 county expendable as such, except as otherwise provided by law."
]5 SECTION 5. Section 238-3 .5, Hawaii Revised Statutes, is
]6 repealed:
]7 [~\~n_e~o_~ a n..... w.... ~..1... v~yi
18 d$ritrte~aat~esx-~-a-) _ e_~~
5` g~
19
20 s~-~E eha' 1 be lean-ed assessed ^a ^~,,,.,~~^a
2] maxis seetlen en the ~F Yt ~z _a,.,~s-~;
r
22 e~ the ` ~,a,. _..,~,zt~e ~j2~-~
county tax6.doc
Page 17 . ~ - A ' O .
1 h, __a ..a ~h.,,~~,~~~.. ~2
2 and use a su3•e~a~ge s~a~~ ~e-€~s-a==~ - ~ N-- ~~i
3 ~a~-yes ade~t=nQ t=Y~e sa~e~ia>=ge ..F ~h,,.
4
5
6
7 ~r a'~eete~ e€ t:a3eat:~en s~a~~ 3~zve
8
9
10
11 ~r-rnea- ene eeunt~ tie-~3~ee~e-~-stxa3~-dete~m~negk
12
14
16 ez--r ~°~~---as e~-dartaar~ ~-993 ,~a _h_„ c..v ..a
17
18 r
_ _ r _ _
20 e5 i~,~~rx~i= ~ l3Pen and kse ...h,,. ~a.,r ,-h,~.h..Y~_v ~h,.
21
22 ta?Ea-c'r ~ B~ that c.^..... ..a,.v_s-7-; .Y~~
county tax6.doc
Page 18 . ~ . A' O .
1
2
3
4 ~e
5
6
7
S
9 '
.7_
10 _ .v.,. ..c .-,a _i,.
12
14 d~e-en the~~~-~ze~~€~' ed €er t33e ~ ~zrr~
15
16 ~ ~ i.., as a i.. N.. ..r ~v...
17 F L. L. a ~ a.. L... L... ~ F ~ l ,-.a
18 F L. F l F ~ l L L. a..l aL. ~l ~ ~ lY F.. ..ti 1.
19
20
21
22
county tax6.doc
Page 19 . ~ . w ' O .
I 2992, v. „ r. ,.w...,... ,,,a ,~~~,sa_~,.r
2 .
3
4 ~e~u~n €e~-the-geried start}ag a€~er-Beee~3-€-~^^~~Q
5 e~rd-~ng be€ere danuar~~ 1-94 and €er t3~e-pe~ied sta~`i~g-a-~~---
6 3 3~ 2992 and endin~be€e~e danrta~~~l~-
7 .
8 .
9 4 ~ a a..Fa~€ment a€te~ Beeember 31 2892 „
I1 e'1Fe ~9e and tt9e ••L,-,,.-•••• ..,_y t... c....,. .c2~ez.6E~
12 ~
13 SECTION 6. There is appropriated out of the general
14 revenues of the State of Hawaii the sum of $
IS for fiscal year 2004-2005, to carry out the purposes of this
16 Act. The sum appropriated shall be expended by the department
17 of taxation; provided any county enacting a county general
18 excise tax ordinance shall pay into the state general fund an
19 amount equal to the amount appropriated by this Act.
20 SECTION 7. Statutory material to be repealed is bracketed
21 and stricken. New statutory material is underscored.
22 SECTION 8. This Act shall take effect on July 1, 2005.
county tax6.doc
Page 20 . ~ . w t O .
1
2 INTRODUCED BY:
3
county tax6.doc