Source: https://www.capitol.hawaii.gov/session2011/Bills/HB793_SD1_PROPOSED_.htm
Timestamp: 2020-08-06 02:25:55
Document Index: 173723789

Matched Legal Cases: ['§237', '§237', '§238', '§238', '§237', '§239']

2011-1990 HB793 SD1 SMA
SECTION 1. The purpose of this Act is to address the projected $1,200,000,000 revenue shortfall that the State of Hawaii faces in the biennium operating budget for fiscal years 2011-2013.
During the 2010 regular session, the state legislature reduced government spending by over $1,200,000,000 in general fund budget cuts. In 2009, it reduced tax credits or imposed new taxes in the amount of over $550,000,000, added $115,000,000 in federal stimulus funds, and made over $150,000,000 worth of transfers from special funds in order to tackle the original $2,100,000,000 revenue shortfall.
The legislature finds, however, that the range of alternative solutions is severely limited during the 2011 session. The legislature has already relied on one-time revenue enhancements and the reduction of government services through furloughs and lay-offs in critically-needed areas. Given these actions, reducing government spending by another $1,200,000,000 in general fund cuts would be difficult.
SECTION 2. The purpose of this part is to temporarily suspend the general excise and use tax exemptions for certain amounts received by certain persons and, instead, require those persons to pay the applicable tax on those amounts at a specified rate. The suspension and imposition of the tax commences on January 1, 2012, and ends on June 30, 2015.
This part does not suspend the existing general excise tax exemption for nonprofit organizations with the exception of the value or gross income received by nonprofit organizations from certain conventions, conferences, trade shows, or display spaces.
"§237- Temporary suspension of exemption of certain amounts; levy of tax. (a) Notwithstanding any other law to the contrary, the exemption of the following amounts from taxation under this chapter shall be suspended from January 1, 2012, through June 30, 2015:
(1) Amounts deducted from the gross income received by contractors as described under section 237-13(3)(B);
(2) Reimbursements received by federal cost-plus contractors for the costs of purchased materials, plant, and equipment as described under section 237-13(3)(C);
(3) Gross receipts of home service providers acting as service carriers providing mobile telecommunications services to other home service providers as described under section 237-13(6)(D);
(4) Amounts deducted from the gross income of real property lessees because of receipt from sublessees as described under section 237-16.5;
(5) The value or gross income received by nonprofit organizations from certain conventions, conferences, trade shows, or display spaces as described under section 237-16.8;
(6) Amounts received by sugarcane producers as described under section 237-24(14);
(7) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped interisland as described under section 237-24.3(1);
(8) Amounts received from the sale of intoxicating liquor, cigarettes and tobacco products, and agricultural, meat, or fish products to persons or common carriers engaged in interstate or foreign commerce as described under section 237-24.3(2);
(9) Amounts received or accrued from the loading or unloading of cargo as described under section 237-24.3(4)(A);
(10) Amounts received or accrued from tugboat and towage services as described under section 237-24.3(4)(B);
(11) Amounts received or accrued from the transportation of pilots or government officials and other maritime-related services as described under section 237-24.3(4)(C);
(12) Amounts received by labor organizations for real property leases as described under section 237-24.3(10);
(13) Amounts received as rent for aircraft or aircraft engines used for interstate air transportation as described under section 237-24.3(12);
(14) Amounts received by exchanges and exchange members as described under section 237-24.5;
(15) Amounts received as high technology development grants under section 206M-15 as described under section 237-24.7(10);
(16) Amounts received from the servicing and maintenance of aircraft or construction of aircraft service and maintenance facilities as described under section 237-24.9;
(17) Amounts received by petroleum product refiners from other refiners for further refining of petroleum products as described under section 237-27;
(18) Gross proceeds received from the construction, reconstruction, erection, operation, use, maintenance, or furnishing of air pollution control facilities, as described under section 237-27.5, that do not have valid certificates of exemption on January 1, 2012;
(19) Gross proceeds received from shipbuilding and ship repairs as described under section 237-28.1;
(20) Amounts received by telecommunications common carriers from call center operators for interstate or foreign telecommunications services as described under section 237-29.8;
(21) Gross proceeds received by qualified businesses in enterprise zones, as described under section 209E-11, that do not have valid certificates of qualification from the department of business, economic development, and tourism on January 1, 2012; and
(22) Gross proceeds received by contractors licensed under chapter 444 for construction within enterprise zones performed for qualified businesses within the enterprise zones or businesses approved by the department of business, economic development, and tourism to enroll into the enterprise zone program, as described under section 209E-11.
(b) Except as otherwise provided under subsection (f) or (g), there is levied, assessed, and collected annually against the persons under subsection (a), a tax at the rate of four per cent on the previously exempt gross income or gross proceeds of sale derived from January 1, 2012, to June 30, 2015.
(c) As used in this section, "previously exempt gross income or gross proceeds of sale" means the amount of the gross income or gross proceeds of sale, the exemption for which is suspended under subsection (a). The term also includes the value received by a nonprofit organization from conventions, conferences, trade show exhibits, and display spaces, the exemption for which is suspended under subsection (a)(5).
(d) The persons exempted under subsection (a), against whom the tax is levied and assessed under this section, shall be responsible for payment of the tax to the director of taxation.
(e) Notwithstanding section 237-8.6, no county surcharge shall be levied, assessed, or collected on any previously exempt gross income or gross proceeds of sale that is subject to taxation under subsection (b).
(f) This section shall not apply to gross income or gross proceeds from binding written contracts entered into prior to July 1, 2011, that do not permit the passing on of increased rates of taxes.
(g) The tax imposed under subsection (b) shall not apply to any gross income or gross proceeds of sale that cannot legally be so taxed under the Constitution or laws of the United States, but only so long as, and only to the extent to which the State is without power to impose the tax.
To the extent that any exemption, exclusion, or apportionment is necessary to comply with the preceding sentence, the director of taxation shall:
(1) Exempt or exclude the gross income or gross proceeds of sale from the tax under subsection (b); or
(2) Apportion the gross income or gross proceeds of sale derived within the State by persons engaged in business both within and without the State to determine the gross income or gross proceeds of sale that are subject to taxation under this chapter for the purposes of section 237-21.
(h) This chapter shall apply to the payment, collection, enforcement, and appeal of the tax levied under this section.
The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91, to effectuate this section.
§237- Information reporting. From January 1, 2012, the director shall require information reporting on all exclusions or exemptions of all amounts, persons, or transactions from this chapter, except for the following:
(1) Amounts received that are exempt under section 237-24(1) through (7); and
(2) Any other amounts, persons, or transactions as determined by the director to be in the best interest of tax administration and made by official pronouncement."
SECTION 4. Chapter 238, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§238- Temporary suspension of exemption of certain amounts; levy of tax. (a) Notwithstanding any other law to the contrary, the exemption of the following from taxation under this chapter shall be suspended from January 1, 2012, through June 30, 2015:
(1) The leasing or renting of aircraft or keeping of aircraft solely for leasing or renting for commercial transportation of passengers and goods or the acquisition or importation of aircraft or aircraft engines by a lessee or renter engaged in interstate air transportation, as described under paragraph (6) of the definition of "use" in section 238-1;
(2) The use of oceangoing vehicles for passenger or passenger and goods transportation from one point to another within the State as a public utility, as described under paragraph (7) of the definition of "use" in section 238-1;
(3) The use of material, parts, or tools imported or purchased by a person licensed under chapter 237 which are used for aircraft service and maintenance or the construction of an aircraft service and maintenance facility, as described under paragraph (8) of the definition of "use" in section 238-1;
(4) The use or sale of intoxicating liquor and cigarette and tobacco products imported into the State and sold to any person or common carrier in interstate commerce, whether ocean-going or air, for consumption out of State by the person, crew, or passengers on the shipper's vessels or airplanes, as described under section 238-3(g);
(5) The use of any vessel constructed under section 189-25 prior to July 1, 1969, as described under section 238‑3(h); and
(6) The use of any air pollution control facility subject to section 237-27.5 as described under section 238‑3(k).
(b) Except as otherwise provided under subsection (f) or (g), there is levied, assessed, and collected annually against the persons under subsection (a), a tax at the rate of four per cent on the previously exempt value of property, services, or contracting that becomes subject to the State's taxing jurisdiction from January 1, 2012, to June 30, 2015.
(c) As used in this section, "previously exempt value of property, services, or contracting" means the value of property, services, or contracting, the exemption for which is suspended under subsection (a).
(e) Notwithstanding section 238-2.6, no county surcharge shall be levied, assessed, or collected on any previously exempt value of property, services, or contracting that is subject to taxation under subsection (b).
(f) This section shall not apply to the value of property, services, or contracting from binding written contracts entered into prior to July 1, 2011, that do not permit the passing on of increased rates of taxes.
(g) The tax imposed under subsection (b) shall not apply to any property, services, or contracting or to any use of the property, services, or contracting that cannot legally be so taxed under the Constitution or laws of the United States, but only so long as, and only to the extent to which the State is without power to impose the tax.
(1) Exempt or exclude the property, services, or contracting or the use of the property, services, or contracting, from the tax under subsection (b); or
(2) Apportion the gross value of services or contracting sold to customers within the State by persons engaged in business both within and without the State to determine the value of that portion of the services or contracting that is subject to taxation under chapter 237 for the purposes of section 237-21.
§238- Information reporting. From January 1, 2012, the director shall require information reporting on all exclusions or exemptions of all amounts, persons, or transactions from this chapter, except for any amounts, persons, or transactions as determined by the director to be in the best interest of tax administration and made by official pronouncement."
SECTION 5. The purpose of this part is to institute temporary tax provisions for two years to raise revenue for the State while lowering the total tax burden for working families by:
(1) Doubling the standard deduction amounts;
(2) Doubling the tax credit for household and dependent care services necessary for gainful employment;
(3) Doubling the income tax credit for low-income household renters;
(4) Doubling the refundable food/excise tax credit;
(5) Increasing the capital goods excise tax credit;
(6) Raising the general excise and use tax rates; and
(7) Raising various public service company tax rates.
SECTION 6. Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:
(1) Sections 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;
(2) Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative, except that the standard deduction amounts provided therein shall instead mean:
(A) [$4,400] $8,800 in the case of:
(i) A joint return as provided by section 235‑93; or
(ii) A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);
(B) [$3,212] $6,424 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);
(C) [$2,200] $4,400 in the case of an individual who is not married and who is not a surviving spouse or head of household; or
(D) [$2,200] $4,400 in the case of a married individual filing a separate return;
(3) Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or such individual's earned income; and
(4) The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5."
"SECTION 6. This Act shall take effect upon approval, provided that:
(2) [Sections 1 and] Section 3 shall apply to taxable years beginning after December 31, 2010; [and]
(3) Section 1 shall apply to taxable years beginning after December 31, 2013; and
[(3)] (4) On December 31, 2015, this Act shall be repealed and sections 235-2.4(a), 235-51(a), (b), and (c), and 235-54(a), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of this Act."
SECTION 8. Section 235-55.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
(1) In general. For each resident taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by such individual during the taxable year. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of the credit over payments due shall be refunded to the resident taxpayer; provided that tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
(2) Applicable percentage defined. For purposes of paragraph (1), the term "applicable percentage" [means twenty-five per cent reduced (but not below fifteen per cent) by one percentage point of each $2,000 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds $22,000.] means:
$0 through $22,000 50%
$22,001 through $24,000 48%
$24,001 through $26,000 46%
$26,001 through $28,000 44%
$28,001 through $30,000 42%
$30,001 through $32,000 40%
$32,001 through $34,000 38%
$34,001 through $36,000 36%
$36,001 through $38,000 34%
$38,001 through $40,000 32%
$40,001 and over 30%"
SECTION 9. Section 235-55.7, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) Each taxpayer with an adjusted gross income of less than $30,000 who has paid more than $1,000 in rent during the taxable year for which the credit is claimed may claim a tax credit of [$50] $100 multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided each taxpayer sixty-five years of age or over may claim double the tax credit; and provided that a resident individual who has no income or no income taxable under this chapter may also claim the tax credit as set forth in this section."
SECTION 10. Section 235-55.85, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) Each resident individual taxpayer may claim a refundable food/excise tax credit multiplied by the number of qualified exemptions to which the taxpayer is entitled in accordance with the table below; provided that a husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled had a joint return been filed.
Under $5,000 [$85] $170
$5,000 under $10,000 [75] 150
$10,000 under $15,000 [65] 130
$15,000 under $20,000 [55] 110
$20,000 under $30,000 [45] 90
$30,000 under $40,000 [35] 70
$40,000 under $50,000 [25] 50
$50,000 and over 0"
SECTION 11. Section 235-110.7, Hawaii Revised Statutes, is amended as follows:
(2) December 31, 1988, the applicable rate shall be four per cent;
(3) December 31, 2008, the applicable rate shall be zero per cent; [and]
(4) December 31, 2009, [and thereafter,] the applicable rate shall be four per cent[.]; and
(5) October 1, 2011, and thereafter, the applicable rate shall be five per cent.
"(e) As used in this section, the definition of section 38 property (with respect to investment in depreciable tangible personal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of December 31, 1984, is operative for the purposes of this section only.
"Cost" means (1) the actual invoice price of the tangible personal property, or (2) the basis from which depreciation is taken under section 167 (with respect to depreciation) or from which a deduction may be taken under section 168 (with respect to accelerated cost recovery system) of the Internal Revenue Code of 1954, as amended, whichever is less.
"Eligible depreciable tangible personal property" is section 38 property as defined by the operative provisions of section 48 and having a depreciable life under section 167 or for which a deduction may be taken under section 168 of the federal Internal Revenue Code of 1954, as amended.
"Placed in service" means the earliest of the following taxable years:
(1) The taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period for depreciation; or
(B) Accelerated cost recovery system, a claim for recovery allowances; with respect to such property begins; or
"Purchase" means an acquisition of property.
"Tangible personal property" means tangible personal property which is placed in service within Hawaii after December 31, 1987, and the purchase or importation of which resulted in a transaction which was subject to the imposition and payment of tax at the rate of [four] five per cent under chapter 237 or 238. "Tangible personal property" does not include tangible personal property which is an integral part of a building or structure or tangible personal property used in a foreign trade zone, as defined under chapter 212."
SECTION 12. Section 237-13, Hawaii Revised Statutes, is amended to read as follows:
(A) Upon every person engaging or continuing in the business of selling any tangible personal property whatsoever (not including, however, bonds or other evidence of indebtedness, or stocks), there is likewise hereby levied, and shall be assessed and collected, a tax equivalent to [four] five per cent of the gross proceeds of sales of the business; provided that insofar as the sale of tangible personal property is a wholesale sale under section [[]237-4(a)(8)[]], the sale shall be subject to section 237-13.3. Upon every person engaging or continuing within this State in the business of a producer, the tax shall be equal to one-half of one per cent of the gross proceeds of sales of the business, or the value of the products, for sale, if sold for delivery outside the State or shipped or transported out of the State, and the value of the products shall be determined in the same manner as the value of manufactured products covered in the cases under paragraph (1)(C).
(A) Upon every person engaging or continuing within the State in the business of contracting, the tax shall be equal to [four] five per cent of the gross income of the business.
(A) Upon every person engaging or continuing within the State in the business of operating a theater, opera house, moving picture show, vaudeville, amusement park, dance hall, skating rink, radio broadcasting station, or any other place at which amusements are offered to the public, the tax shall be equal to [four] five per cent of the gross income of the business, and in the case of a sale of an amusement at wholesale under section 237-4(a)(13), the tax shall be subject to section 237-13.3.
(5) Tax upon sales representatives, etc. Upon every person classified as a representative or purchasing agent under section 237-1, engaging or continuing within the State in the business of performing services for another, other than as an employee, there is likewise hereby levied and shall be assessed and collected a tax equal to [four] five per cent of the commissions and other compensation attributable to the services so rendered by the person.
(A) Upon every person engaging or continuing within the State in any service business or calling including professional services not otherwise specifically taxed under this chapter, there is likewise hereby levied and shall be assessed and collected a tax equal to [four] five per cent of the gross income of the business, and in the case of a wholesaler under section 237-4(a)(10), the tax shall be equal to one-half of one per cent of the gross income of the business. Notwithstanding the foregoing, a wholesaler under section 237-4(a)(10) shall be subject to section 237-13.3.
(9) Tax on other business. Upon every person engaging or continuing within the State in any business, trade, activity, occupation, or calling not included in the preceding paragraphs or any other provisions of this chapter, there is likewise hereby levied and shall be assessed and collected, a tax equal to [four] five per cent of the gross income thereof. In addition, the rate prescribed by this paragraph shall apply to a business taxable under one or more of the preceding paragraphs or other provisions of this chapter, as to any gross income thereof not taxed thereunder as gross income or gross proceeds of sales or by taxing an equivalent value of products, unless specifically exempted."
SECTION 13. Section 237-15, Hawaii Revised Statutes, is amended to read as follows:
"§237-15 Technicians. When technicians supply dentists or physicians with dentures, orthodontic devices, braces, and similar items which have been prepared by the technician in accordance with specifications furnished by the dentist or physician, and such items are to be used by the dentist or physician in the dentist's or physician's professional practice for a particular patient who is to pay the dentist or physician for the same as a part of the dentist's or physician's professional services, the technician shall be taxed as though the technician were a manufacturer selling a product to a licensed retailer, rather than at the rate of [four] five per cent which is generally applied to professions and services."
SECTION 14. Section 237-16.5, Hawaii Revised Statutes, is amended as follows:
"(a) This section relates to the leasing of real property by a lessor to a lessee. There is hereby levied, and shall be assessed and collected annually, a privilege tax against persons engaging or continuing within the State in the business of leasing real property to another, equal to [four] five per cent of the gross proceeds or gross income received or derived from the leasing; provided that where real property is subleased by a lessee to a sublessee, the lessee, as provided in this section, shall be allowed a deduction from the amount of gross proceeds or gross income received from its sublease of the real property. The deduction shall be in the amount allowed under this section.
"(f) This section shall not cause the tax upon a lessor, with respect to any item of the lessor's gross proceeds or gross income, to exceed [four] five per cent."
SECTION 15. Section 237-18, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:
As used in this subsection "tourism related services" means catamaran cruises, canoe rides, dinner cruises, lei greetings, transportation included in a tour package, sightseeing tours not subject to chapter 239, admissions to luaus, dinner shows, extravaganzas, cultural and educational facilities, and other services rendered directly to the customer or tourist, but only if the providers of the services other than air transportation are subject to a [four] five per cent tax under this chapter or chapter 239."
SECTION 16. Section 238-2, Hawaii Revised Statutes, is amended to read as follows:
(3) In all other cases, [four] five per cent of the value of the property.
SECTION 17. Section 238-2.3, Hawaii Revised Statutes, is amended to read as follows:
(3) In all other cases, the importer or purchaser is subject to the tax at the rate of [four] five per cent on the value of the imported or purchased services or contracting."
SECTION 18. Section 239-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) There shall be levied and assessed upon each public utility, except airlines, motor carriers, common carriers by water, and contract carriers taxed by section 239-6, a tax of such rate per cent of its gross income each year from its public utility business as shall be determined in the manner hereinafter provided. The tax imposed by this section is in lieu of all taxes other than those below set out, and is a means of taxing the personal property of the public utility, tangible and intangible, including going concern value. In addition to the tax imposed by this chapter there also are imposed income taxes, the specific taxes imposed by chapter 249, the fees prescribed by chapter 269, any tax specifically imposed by the terms of the public utility's franchise or under chapter 240, the use or consumption tax imposed by chapter 238, and employment taxes.
The rate of the tax upon the gross income of the public utility shall be [four] five per cent; provided that if:
(1) A county provides by ordinance for a real property tax exemption for real property used by a public utility in its public utility business and owned by the public utility (or leased to it by a lease under which the public utility is required to pay the taxes upon the property), and
(2) The county has not denied the exemption to the public utility, but excluding a denial based upon a dispute as to the ownership, lease, or use of a specific parcel of real property,
then there shall be levied and assessed a tax in excess of the [four] five per cent rate determined in the manner hereinafter provided upon the gross income allocable to such county. The revenues generated from the tax in excess of the [four] five per cent rate hereinbefore established shall be paid by the public utility directly to such county based upon the proportion of gross income from its public utility business attributable to such county, based upon the allocation made in the public utility's filings with the State of Hawaii; provided that if the gross income from the public utility business attributable to such county is not so allocated in the public utility's State filings, then the gross income from the public utility business shall be equitably allocated to each county. The relative number of access lines in each county shall be deemed an acceptable basis of equitable allocation for telecommunication companies.
The rate of the tax in excess of the [four] five per cent rate hereinbefore established upon the gross income from the public utility business shall be determined as follows:
If the ratio of the net income of the company to its gross income is fifteen per cent or less, the rate of tax in excess of the [four] five per cent rate on gross income shall be 1.885 per cent; for all companies having net income in excess of fifteen per cent of the gross, the rate of the tax on gross income shall increase continuously in proportion to the increase in ratio of net income to gross, at such rate that for each increase of one per cent in the ratio of net income to gross, there shall be an increase of .2675 per cent in the rate of the tax.
The following formula may be used to determine the rate, in which formula the term "R" is the ratio of net income to gross income, and "X" is the required rate of the tax on gross income for the utility in question:
X = (26.75R-2.1275)%;
provided that in no case governed by the formula shall "X" be less than 1.885 per cent or more than 4.2 per cent.
However, if the gross income is apportioned under section 239-8(b) or (c), there shall be no adjustment of the rate of tax on the amount of gross income so apportioned to the State on account of the ratio of the net income to the gross income being in excess of fifteen per cent, and it shall be assumed in such case that the ratio is fifteen per cent or less."
SECTION 19. Section 239-6, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) There shall be levied and assessed upon each airline a tax of [four] five per cent of its gross income each year from the airline business; provided that if an airline adopts a rate schedule for students in grade twelve or below traveling in school groups providing such students at reasonable hours a rate less than one-half of the regular adult fare, the tax shall be three per cent of its gross income each year from the airline business.
(b) There shall be levied and assessed upon each motor carrier, each common carrier by water, and upon each contract carrier other than a motor carrier, a tax of [four] five per cent of its gross income each year from the motor carrier or contract carrier business."
SECTION 20. Section 239-7, Hawaii Revised Statutes, is amended as follows:
"(a) The tax imposed by this chapter shall be assessed against each public service company in the manner provided by this chapter, and shall be paid to the department of taxation at the times and in the manner (in installments or otherwise) provided by this section, except as provided in section 239‑5(a), where there is levied and assessed a tax in excess of [four] five per cent upon gross income, the revenues generated from the tax in excess of the [four] five per cent rate shall be paid to the respective county director of finance at the times and in the manner (in installments or otherwise) provided by this section."
"(c) The department shall prescribe the forms in which returns shall be made so as to reflect clearly the liability of each public service company subject to this tax, and may provide in the forms for such additional information as it may deem necessary. All provisions of the laws, not inapplicable and not inconsistent with this chapter, relating to returns for income tax purposes, the assessment (including additional assessments), collection, and payment (in installments or otherwise) of income taxes and the powers and duties of the department and the state director of finance in connection therewith, and relating to appeals from or other adjustments of such assessments, limitation periods for assessments, enforcement of attendance of witnesses, and the production of evidence, examination of witnesses and records, the effect of assessments, tax books, and lists and other official tax records as evidence, delinquent dates and penalties, and the rights and liabilities (civil and criminal) of taxpayers and other persons in connection with any matters dealt with by chapter 235, are made applicable (1) to the taxes and the assessment, payment, and collection thereof, provided by this chapter, and (2) to the department and the state director of finance in connection with the taxes and the assessment, payment, or enforcement of payment and collection thereof, and (3) to taxpayers and other persons affected by this chapter, as the case may be. The provisions of chapter 235 regarding the limitation period for assessment and refunds shall run from the filing of the return for the taxable year, or the due date prescribed for the filing of the return, whichever is later. With respect to payments due to a county of the revenues generated from the tax in excess of the [four] five per cent rate imposed under section 239-5(a), a county director of finance shall be afforded such rights and procedures of the department in the enforcement of payment and collection of the taxes assessed and levied under this chapter."
SECTION 21. Section 239-9, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) First year of doing business. The measure of the tax for the year in which the company begins business is an estimate of the gross income of the public service company for that year or for the part of that year in which it is in business.
The tax thereon for the year in which the company begins business shall be at the following rate:
(1) If subsection (a)(2) applies, at the rate of [four] five per cent, or
(2) If subsection (a)(1) applies but the company though in business at the commencement of the calendar year was not in business during any part of the preceding year, the tax shall be at the rate provided by sections 239‑5 and 239-6, except that there shall be no adjustment of the rate of tax on account of the ratio of the net income to the gross income being in excess of fifteen per cent and it shall be assumed for purposes of this subsection and subsection (e) that the ratio is fifteen per cent or less.
The estimate shall be made and the tax returned on or before the twentieth day of the third month after the month in which the company begins business and shall be subject to adjustment by the filing of an amended return as provided in subsection (e). Payment of the tax shall accompany the return unless time for payment is extended by the director of taxation. The extension may be granted by the director in order to provide for payment of the tax in installments during the remainder of the taxable year."
SECTION 22. Section 239-10, Hawaii Revised Statutes, is amended to read as follows:
"§239-10 Disposition of revenues. All taxes collected under this chapter shall be state realizations; provided that where a tax in excess of the [four] five per cent rate upon gross income is levied and assessed under section 239-5(a), such tax revenues to be paid to the county shall be realizations of such county."
SECTION 23. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2011-2012 for the department of taxation to implement procedures necessary to expedite the tax provisions of this Act.
SECTION 25. This Act shall take effect on July 1, 2011, and shall be repealed on June 30, 2015; provided that:
(1) The department of taxation shall have the authority to postpone the payment of the tax imposed under this Act until the deadline to file the general excise or use tax annual return and reconciliation form, as applicable, without regard to any extension;
(2) The suspension of the exemption from taxation of amounts described under section 237-24(14), Hawaii Revised Statutes, pursuant to section 3 of this Act, shall not be affected by the repeal and reenactment of that section on December 31, 2013, pursuant to Act 70, Session Laws of Hawaii 2009;
(3) The suspension of certain exemptions from taxation of amounts described under sections 237-24.3 and 237-24.7, Hawaii Revised Statutes, pursuant to section 3 of this Act, shall not be affected by the repeal and reenactment of those sections on December 31, 2014, pursuant to Act 91, Session Laws of Hawaii 2010;
(4) Sections 6, 8, 9, and 10 shall apply to taxable years beginning after December 31, 2011, and shall be repealed on December 31, 2013, and sections 235‑55.6(a), 235-55.7(c), and 235-55.85(b), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of this Act; and
(5) Sections 11 through 22 shall take effect on October 1, 2011, and shall be repealed on September 30, 2013, and sections 235-110.7(a), 235-110.7(e), 237-13, 237‑15, 237-16.5(a), 237-16.5(f), 237-18(f), 238-2, 238-2.3, 239‑5(a), 239-6(a), 239-6(b), 239-7(a), 239-7(c), 239‑9(c), and 239-10, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of this Act.
Suspends from January 1, 2012, to June 30, 2015, the exemptions for certain persons and certain amounts of gross income or proceeds from the general excise and use tax and requires the payment of the tax at a graduated rate. For two years: doubles the standard deduction amounts, the tax credit for household and dependent care services necessary for gainful employment, the income tax credit for low-income household renters, and the refundable food/excise tax credit; increases the capital goods excise tax credit, general excise and use tax rates, and various public service company tax rates by one per cent; appropriates funds to expedite implementation. (Proposed SD1)