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HOUSE OF REPRESENTATIVES |
H.B. NO. |
962 |
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TWENTY-SEVENTH LEGISLATURE, 2013 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO SECTION 237-24.3, HAWAII REVISED STATUTES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The exemption to Hawaii's General Excise Tax described in Section 237-24.3(2)(C), Hawaii Revised Statutes, was originally designed to incentivize the purchase of food from local agricultural sources, but has not resulted in such an incentive. The exemption was unconstitutional in its original form, as detailed in In re Tax Appeal of Hawaiian Flour Mills, Inc., 76 Haw. 1, 868 P.2d 419 (Hawaii 1994), and was amended in 2003 to repair the constitutional fault. However, in its present form, the exemption may apply to any person selling any food to common carriers for consumption out-of-state. Such a broad exemption defeats the exemption's original purpose and provides an unneeded tax break to common carriers and the catering companies that serve those common carriers.
SECTION 2. Section 237-24.3, Hawaii Revised Statutes, is amended to read as follows:
"§237-24.3 Additional amounts not taxable. In addition to the amounts not taxable under section 237-24, this chapter shall not apply to:
(1) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped for a producer or produce dealer on one island of this State to a person, firm, or organization on another island of this State. The terms "agricultural commodity", "producer", and "produce dealer" shall be defined in the same manner as they are defined in section 147-1; provided that agricultural commodities need not have been produced in the State; and
[(2) Amounts received from sales of:
(A) Intoxicating liquor as the term
"liquor" is defined in chapter 244D;
(B) Cigarettes and tobacco products
as defined in chapter 245; and
(C) Agricultural, meat, or fish
products;
to any person or common carrier in interstate
or foreign commerce, or both, whether ocean-going or air, for consumption
out-of-state on the shipper's vessels or airplanes;
(3)] (2) Amounts received by the
manager, submanager, or board of directors of:
(A) An association of owners of a condominium property regime established in accordance with chapter 514A or 514B; or
(B) A nonprofit homeowners or community association incorporated in accordance with chapter 414D or any predecessor thereto and existing pursuant to covenants running with the land,
in reimbursement of sums paid for common expenses;
[(4)] (3) Amounts received or
accrued from:
(A) The loading or unloading of cargo from ships, barges, vessels, or aircraft, whether or not the ships, barges, vessels, or aircraft travel between the State and other states or countries or between the islands of the State;
(B) Tugboat services including pilotage fees performed within the State, and the towage of ships, barges, or vessels in and out of state harbors, or from one pier to another; and
(C) The transportation of pilots or governmental officials to ships, barges, or vessels offshore; rigging gear; checking freight and similar services; standby charges; and use of moorings and running mooring lines;
[(5)] (4) Amounts received by an
employee benefit plan by way of contributions, dividends, interest, and other
income; and amounts received by a nonprofit organization or office, as payments
for costs and expenses incurred for the administration of an employee benefit
plan; provided that this exemption shall not apply to any gross rental income
or gross rental proceeds received after June 30, 1994, as income from
investments in real property in this State; and provided further that gross
rental income or gross rental proceeds from investments in real property
received by an employee benefit plan after June 30, 1994, under written
contracts executed prior to July 1, 1994, shall not be taxed until the
contracts are renegotiated, renewed, or extended, or until after December 31,
1998, whichever is earlier. For the purposes of this paragraph, "employee
benefit plan" means any plan as defined in section 1002(3) of title 29 of
the United States Code, as amended;
[(6)] (5) Amounts received for
purchases made with United States Department of Agriculture food coupons under
the federal food stamp program, and amounts received for purchases made with
United States Department of Agriculture food vouchers under the Special
Supplemental Foods Program for Women, Infants and Children;
[(7)] (6) Amounts received by a
hospital, infirmary, medical clinic, health care facility, pharmacy, or a
practitioner licensed to administer the drug to an individual for selling
prescription drugs or prosthetic devices to an individual; provided that this
paragraph shall not apply to any amounts received for services provided in selling
prescription drugs or prosthetic devices. As used in this paragraph:
"Prescription drugs" are those drugs defined under section 328-1 and dispensed by filling or refilling a written or oral prescription by a practitioner licensed under law to administer the drug and sold by a licensed pharmacist under section 328-16 or practitioners licensed to administer drugs; and
"Prosthetic device" means any artificial device or appliance, instrument, apparatus, or contrivance, including their components, parts, accessories, and replacements thereof, used to replace a missing or surgically removed part of the human body, which is prescribed by a licensed practitioner of medicine, osteopathy, or podiatry and which is sold by the practitioner or which is dispensed and sold by a dealer of prosthetic devices; provided that "prosthetic device" shall not mean any auditory, ophthalmic, dental, or ocular device or appliance, instrument, apparatus, or contrivance;
[(8)] (7) Taxes on transient
accommodations imposed by chapter 237D and passed on and collected by operators
holding certificates of registration under that chapter;
[(9)] (8) Amounts received as dues
by an unincorporated merchants association from its membership for advertising
media, promotional, and advertising costs for the promotion of the association
for the benefit of its members as a whole and not for the benefit of an
individual member or group of members less than the entire membership;
[(10)] (9) Amounts received by a
labor organization for real property leased to:
(A) A labor organization; or
(B) A trust fund established by a labor organization for the benefit of its members, families, and dependents for medical or hospital care, pensions on retirement or death of employees, apprenticeship and training, and other membership service programs.
As used in this paragraph, "labor organization" means a labor organization exempt from federal income tax under section 501(c)(5) of the Internal Revenue Code, as amended;
[(11)] (10) Amounts received from
foreign diplomats and consular officials who are holding cards issued or
authorized by the United States Department of State granting them an exemption
from state taxes; and
[(12)] (11) Amounts received as rent
for the rental or leasing of aircraft or aircraft engines used by the lessees
or renters for interstate air transportation of passengers and goods. For
purposes of this paragraph, payments made pursuant to a lease shall be
considered rent regardless of whether the lease is an operating lease or a
financing lease. The definition of "interstate air
transportation" is the same as in 49 U.S.C. section 40102."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act, upon its approval, shall take effect on July 1, 2013.
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INTRODUCED BY: |
_____________________________ |
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BY REQUEST |
Report Title:
Section 237-24.3, Hawaii Revised Statutes
Description:
Repeal exemption for liquor, tobacco, and food sold to common carriers.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.