2011 House Bill 793 (Bill to raise GE tax and take away tax exemptions)

From Grassroot Institute

A general excise tax increase bill (2010 HB2877) that was killed last year -- because the head of the Senate Ways and Means Committee said “small businesses would be threatened” by a GE tax increase -- was resurrected again this year in a very confusingly written yet similar form. 

However, it took until April Fools’ Day this legislative session for the Senate to change 2011 House Bill 793 to that “threatening” measure. It started out in January as a 3-page bill to delay standard deduction and personal exemption increases. But after making it through the first crossover, the measure morphed into a 65-page bill that aims to increase the General Excise Tax from 4 percent to 5 percent and to suspend tax exemptions for income and money received in 28 industries, among things.

The public will be able to testify on HB793 SD 1 (Proposed) in a scheduled hearing in the Senate Ways and Means Committee on Wed. April 6, 2011, 9:30 a.m. in Conference Room 211 at the State Capitol.

Here’s the latest proposed version of the bill to be heard this Wednesday:  http://www.capitol.hawaii.gov/session2011/Bills/HB793_SD1_PROPOSED_.htm

Here’s a link to send in testimony for HB793:  http://www.capitol.hawaii.gov/emailtestimony/?measure=HB793

And here is a breakdown of the HB793 proposed SD1 as it pertains to various industries and taxpayers who will be affected.

A) Suspended tax exemptions include:

1. For gross income received by contractors;
2. Reimbursements received by federal cost-plus contractors for the costs of purchased materials, plant, and equipment;
3. Gross receipts of home service providers acting as service carriers providing mobile telecommunications services to other home service providers;
4. Gross income of real property lessees because of receipt from sublessees;
5. The value or gross income received by nonprofit organizations from certain conventions, conferences, trade show or display spaces;
6. Amounts received by sugarcane producers;
7. Amounts received from the loading, transportation, and unloading of agricultural commodities shipped interisland;
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;
9. Amounts received or accrued from the loading or unloading of cargo;
10. Amounts received or accrued from tugboat and towage services;
11. Amounts received or accrued from the transportation of pilots or government officials and other maritime-related services;
12. Amounts received by labor organizations for real property leases;
13. Amounts received as rent for aircraft or aircraft engines used for interstate air transportation;
14. Amounts received by exchanges and exchange members;
15. Amounts received as high technology development grants;
16. Amounts received from the servicing and maintenance of aircraft or construction of aircraft service and maintenance facilities;
17. Amounts received by petroleum product refiners from other refiners for further refining of petroleum products;
18. Gross proceeds received from the construction, reconstruction, erection, operation, use, maintenance, or furnishing of air pollution control facilities that do not have valid certificates of exemption on Jan. 1, 2012;
19. Gross proceeds received from shipbuilding and ship repairs;
20. Amounts received by telecommunications common carriers from call center operators for interstate or foreign telecommunications services;
21. Gross proceeds received by qualified businesses in enterprise zones that do not have valid certificates of qualification from the department of business, economic development, and tourism on Jan. 1, 2012;
22. Gross proceeds received by contractors licensed under chapter 444 for construction within enterprise zones or businesses approved by the department of business, economic development and tourism to enroll into the enterprise zone program;
23. 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;
24. The use of oceangoing vehicles for passenger or passenger and goods transportation from one point to another within the State as a public utility;
25. 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;
26. 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;
27. The use of any vessel constructed under section 189-25 prior to July 1, 1969; and
28. The use of any air pollution control facility

The tax is at the rate of 4 percent on the previously exempt gross income or gross proceeds of sale derived from January 1, 2012, to June 30, 2015.

Also, no county surcharge shall be levied, assessed or collected on previously exempt gross income or gross proceeds of sale subject to taxation.

B) GE tax rate for the following categories will increase from 4 percent to 5 percent (a 25% increase) from Jan. 1, 2012, to June 30, 2015:

1. Tax on business of selling or producing tangible personal property; 
2. Tax upon contractors;
3. Tax upon theaters, amusements, radio broadcasting stations, etc.;
4. Tax upon sales representatives, etc.;
5. Tax on service business;
6. Tax on other business, that is, upon every person engaging or continuing within the state in any business, trade, activity, occupation;
7. for persons engaging or continuing within the state in the business of leasing real property to another;
8. on tourism related services;
9. on importer or purchaser subject to GE tax;
10. on tangible personal property subject to the GE tax;
11. on importer or purchaser of services or contracting subject to the GE tax;
12. on gross income of each public utility, including airlines, motor carriers, common carriers by water, and contract carriers; and
13. for businesses in the first year of doing business.

To let all legislators know what you think about this bill, or any other bill, go to:

• sens@capitol.hawaii.gov
• reps@capitol.hawaii.gov

Or find your individual Senator or Representative at:

• http://www.capitol.hawaii.gov/session2011/members/senate/senatemembers.aspx
• http://www.capitol.hawaii..gov/session2011/members/house/housemembers.aspx

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