| 47 | | - | PART I SECTION 1. The legislature finds that the virus known as SARS-CoV-2 causes a disease named coronavirus disease 2019 (COVID-19), which spread globally and was declared a pandemic by the World Health Organization on March 11, 2020. Upon reaching Hawaii's shores, the COVID‑19 outbreak disrupted the local economy, resulting in a budget shortfall that was estimated to exceed two billion dollars as of December of 2020. The legislature additionally finds that it is necessary to generate revenue to allow the State to meet its strategic goals, avoid furloughs and layoffs for state workers, and prevent disruptions to essential government services. While the current governor proposed furloughing state workers to manufacture approximately $300,000,000 in savings beginning in January of 2021, the university of Hawaii economic research organization has found that every $1 in state salary reductions results in a $1.50 decrease in overall economic activity. Accordingly, the purpose of this Act is to preserve essential services and prevent employment reductions by generating revenue for the State by: (1) Increasing the personal income tax rate for high earners; (2) Increasing the tax on capital gains; (3) Increasing the corporate income tax and establishing a single corporate income tax rate; (4) Suspending the application of certain general excise tax and use tax exemptions; and (5) Increasing conveyance taxes for the sale of properties valued at $1,000,000 or greater. PART II SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a) through (c) to read as follows: "(a) There is hereby imposed on the taxable income of every: (1) Taxpayer who files a joint return under section 235‑93; and (2) Surviving spouse, a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $4,000 1.40% of taxable income Over $4,000 but $56.00 plus 3.20% of not over $8,000 excess over $4,000 Over $8,000 but $184.00 plus 5.50% of not over $16,000 excess over $8,000 Over $16,000 but $624.00 plus 6.40% of not over $24,000 excess over $16,000 Over $24,000 but $1,136.00 plus 6.80% of not over $32,000 excess over $24,000 Over $32,000 but $1,680.00 plus 7.20% of not over $40,000 excess over $32,000 Over $40,000 but $2,256.00 plus 7.60% of not over $60,000 excess over $40,000 Over $60,000 but $3,776.00 plus 7.90% of not over $80,000 excess over $60,000 Over $80,000 $5,356.00 plus 8.25% of excess over $80,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 $6,427.00 plus 8.25% of excess over $96,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $300,000 excess over $96,000 Over $300,000 but $23,257.00 plus 9.00% of not over $350,000 excess over $300,000 Over $350,000 but $27,757.00 plus 10.00% of not over $400,000 excess over $350,000 Over $400,000 $32,757.00 plus 11.00% of excess over $400,000. In the case of any taxable year beginning after December 31, 2020, but before January 1, 2028: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $300,000 excess over $96,000 Over $300,000 but $23,257.00 plus 9.00% of not over $350,000 excess over $300,000 Over $350,000 but $27,757.00 plus 10.00% of not over $400,000 excess over $350,000 Over $400,000 $32,757.00 plus 16.00% of excess over $400,000. In the case of any taxable year beginning after December 31, 2027: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $300,000 excess over $96,000 Over $300,000 but $23,257.00 plus 9.00% of not over $350,000 excess over $300,000 Over $350,000 but $27,757.00 plus 10.00% of not over $400,000 excess over $350,000 Over $400,000 $32,757.00 plus 11.00% of excess over $400,000. (b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $3,000 1.40% of taxable income Over $3,000 but $42.00 plus 3.20% of not over $6,000 excess over $3,000 Over $6,000 but $138.00 plus 5.50% of not over $12,000 excess over $6,000 Over $12,000 but $468.00 plus 6.40% of not over $18,000 excess over $12,000 Over $18,000 but $852.00 plus 6.80% of not over $24,000 excess over $18,000 Over $24,000 but $1,260.00 plus 7.20% of not over $30,000 excess over $24,000 Over $30,000 but $1,692.00 plus 7.60% of not over $45,000 excess over $30,000 Over $45,000 but $2,832.00 plus 7.90% of not over $60,000 excess over $45,000 Over $60,000 $4,017.00 plus 8.25% of excess over $60,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 $4,820.00 plus 8.25% of excess over $72,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $225,000 excess over $72,000 Over $225,000 but $17,443.00 plus 9.00% of not over $262,500 excess over $225,000 Over $262,500 but $20,818.00 plus 10.00% of not over $300,000 excess over $262,500 Over $300,000 $24,568.00 plus 11.00% of excess over $300,000. In the case of any taxable year beginning after December 31, 2020, but before January 1, 2028: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $225,000 excess over $72,000 Over $225,000 but $17,443.00 plus 9.00% of not over $262,500 excess over $225,000 Over $262,500 but $20,818.00 plus 10.00% of not over $300,000 excess over $262,500 Over $300,000 $24,568.00 plus 16.00% of excess over $300,000. In the case of any taxable year beginning after December 31, 2027: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $225,000 excess over $72,000 Over $225,000 but $17,443.00 plus 9.00% of not over $262,500 excess over $225,000 Over $262,500 but $20,818.00 plus 10.00% of not over $300,000 excess over $262,500 Over $300,000 $24,568.00 plus 11.00% of excess over $300,000. (c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $2,000 1.40% of taxable income Over $2,000 but $28.00 plus 3.20% of not over $4,000 excess over $2,000 Over $4,000 but $92.00 plus 5.50% of not over $8,000 excess over $4,000 Over $8,000 but $312.00 plus 6.40% of not over $12,000 excess over $8,000 Over $12,000 but $568.00 plus 6.80% of not over $16,000 excess over $12,000 Over $16,000 but $840.00 plus 7.20% of not over $20,000 excess over $16,000 Over $20,000 but $1,128.00 plus 7.60% of not over $30,000 excess over $20,000 Over $30,000 but $1,888.00 plus 7.90% of not over $40,000 excess over $30,000 Over $40,000 $2,678.00 plus 8.25% of excess over $40,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 $3,214.00 plus 8.25% of excess over $48,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $150,000 excess over $48,000 Over $150,000 but $11,629.00 plus 9.00% of not over $175,000 excess over $150,000 Over $175,000 but $13,879.00 plus 10.00% of not over $200,000 excess over $175,000 Over $200,000 $16,379.00 plus 11.00% of excess over $200,000. In the case of any taxable year beginning after December 31, 2020, but before January 1, 2028: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $150,000 excess over $48,000 Over $150,000 but $11,629.00 plus 9.00% of not over $175,000 excess over $150,000 Over $175,000 but $13,879.00 plus 10.00% of not over $200,000 excess over $175,000 Over $200,000 $16,379.00 plus 16.00% of excess over $200,000. In the case of any taxable year beginning after December 31, 2027: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $150,000 excess over $48,000 Over $150,000 but $11,629.00 plus 9.00% of not over $175,000 excess over $150,000 Over $175,000 but $13,879.00 plus 10.00% of not over $200,000 excess over $175,000 Over $200,000 $16,379.00 plus 11.00% of excess over $200,000." PART III SECTION 3. Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows: "(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of: (1) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of: (A) The taxable income reduced by the amount of net capital gain, or (B) The amount of taxable income taxed at a rate below [7.25] eleven per cent, plus (2) A tax of [7.25] eleven per cent of the amount of taxable income in excess of the amount determined under paragraph (1). This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986." PART IV SECTION 4. Section 235-71, Hawaii Revised Statutes, is amended as follows: 1. By amending subsections (a) and (b) to read: "(a) A tax at the rates herein provided shall be assessed, levied, collected, and paid for each taxable year on the taxable income of every corporation, including a corporation carrying on business in partnership, except that in the case of a regulated investment company the tax is as provided by subsection (b) and further that in the case of a real estate investment trust as defined in section 856 of the Internal Revenue Code of 1954 the tax is as provided in subsection (d). "Corporation" includes any professional corporation incorporated pursuant to chapter 415A. The tax on all taxable income shall be at the rate of [4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent. (b) In the case of a regulated investment company there is imposed on the taxable income, computed as provided in sections 852 and 855 of the Internal Revenue Code but with the changes and adjustments made by this chapter (without prejudice to the generality of the foregoing, the deduction for dividends paid is limited to such amount of dividends as is attributable to income taxable under this chapter), a tax [consisting in the sum] of [the following: 4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent." 2. By amending subsection (d) to read: "(d) In the case of a real estate investment trust there is imposed on the taxable income, computed as provided in sections 857 and 858 of the Internal Revenue Code but with the changes and adjustments made by this chapter (without prejudice to the generality of the foregoing, the deduction for dividends paid is limited to such amount of dividends as is attributable to income taxable under this chapter), a tax [consisting in the sum] of [the following: 4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent. In addition to any other penalty provided by law any real estate investment trust whose tax liability for any taxable year is deemed to be increased pursuant to section 859(b)(2)(A) or 860(c)(1)(A) after December 31, 1978, (relating to interest and additions to tax determined with respect to the amount of the deduction for deficiency dividends allowed) of the Internal Revenue Code shall pay a penalty in an amount equal to the amount of interest for which such trust is liable that is attributable solely to such increase. The penalty payable under this subsection with respect to any determination shall not exceed one-half of the amount of the deduction allowed by section 859(a), or 860(a) after December 31, 1978, of the Internal Revenue Code for such taxable year." PART V SECTION 5. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows: "§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 July 1, 2021, through June 30, 2023: (1) Reimbursements received by federal cost-plus contractors for the costs of purchased materials, plant, and equipment as described under section 237‑13(3)(C); (2) 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); (3) Amounts deducted from the gross income of real property lessees because of receipt from sublessees as described under section 237-16.5; (4) Amounts received by sugarcane producers as described under section 237-24(14); (5) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped interisland as described under section 237-24.3(1); (6) Amounts received or accrued from the loading or unloading of cargo as described under section 237‑24.3(3)(A); (7) Amounts received or accrued from tugboat and towage services as described under section 237-24.3(3)(B); (8) Amounts received or accrued from the transportation of pilots or governmental officials and other maritime‑related services as described under section 237‑24.3(3)(C); (9) Amounts received by exchanges and exchange members as described under section 237-24.5; (10) Amounts received as high technology research and development grants under section 206M-15 as described under section 237-24.7(10); (11) Gross proceeds from the sale of the following: (A) Intoxicating liquor, as described under section 237-25(a)(1), to the United States (including any agency or instrumentality of the United States that is wholly owned or otherwise so constituted as to be immune from the levy of a tax under chapter 238 or 244D, but not including national banks) or any organization to which the sale is permitted by the proviso of "Class 3" of section 281-31 that is located on any Army, Navy, or Air Force reservation; (B) Tobacco products and cigarettes, as described under section 237-25(a)(2), to the United States (including any agency or instrumentality thereof that is wholly owned or otherwise so constituted as to be immune from the levy of tax under chapter 238 or 245, but not including national banks); and (C) Other tangible personal property, as described under section 237-25(a)(3), to the United States (including any agency, instrumentality, or federal credit union thereof, but not including national banks) and any state‑chartered credit union; (12) Amounts received by petroleum product refiners from other refiners for further refining of petroleum products as described under section 237-27; (13) 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 July 1, 2021; (14) Gross proceeds received from shipbuilding and ship repairs as described under section 237‑28.1; (15) Amounts received by telecommunications common carriers from call center operators for interstate or foreign telecommunications services as described under section 237‑29.8; (16) 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 July 1, 2021; and (17) 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 (e), (f), or (g), there is levied, assessed, and collected annually against a taxpayer receiving or deriving previously exempt gross income or gross proceeds of sale from July 1, 2021, to June 30, 2023, a tax at the rate of four per cent on that previously exempt gross income or gross proceeds of sale. (c) The taxpayer against whom the tax is levied and assessed under this section shall be responsible for payment of the tax to the director of taxation. (d) 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). (e) This section shall not apply to gross income or gross proceeds from binding written contracts entered into prior to July 1, 2021, that do not permit the passing on of increased rates of taxes. (f) This section shall not apply to gross income or gross proceeds from stevedoring services and related services, as defined in section 382-1, furnished to a company by its wholly owned subsidiary. (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 is 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. (i) The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91 to effectuate this section. (j) 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). §237- Information reporting. Beginning July 1, 2021, the director of taxation 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 6. 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 July 1, 2021, through June 30, 2023: (1) The use or sale of intoxicating liquor and cigarettes 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); (2) The use of any vessel constructed under section 189‑25 prior to July 1, 1969, as described under section 238‑3(h); and (3) 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 (e) or (f), there is levied, assessed, and collected annually against a taxpayer who imports or purchases previously exempt property, services, or contracting for use in this State that becomes subject to the State's taxing jurisdiction from July 1, 2021, to June 30, 2023, a tax at the rate of four per cent on the value of that previously exempt property, services, or contracting. (c) The taxpayer against whom the tax is levied and assessed under this section shall be responsible for payment of the tax to the director of taxation. (d) Notwithstanding section 238-2.6, no county surcharge shall be levied, assessed, or collected on the value of any previously exempt property, services, or contracting that is subject to taxation under subsection (b). (e) This section shall not apply to any property, services, or contracting imported or purchased under binding written contracts entered into prior to July 1, 2021, that do not permit the passing on of increased rates of taxes. (f) 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. 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 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. (g) This chapter shall apply to the payment, collection, enforcement, and appeal of the tax levied under this section. (h) The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91 to effectuate this section. (i) As used in this section, "previously exempt property, services, or contracting" means property, services, or contracting, the exemption for which is suspended under subsection (a). §238- Information reporting. Beginning July 1, 2021, the director of taxation 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." PART VI SECTION 7. Section 247-2, Hawaii Revised Statutes, is amended to read as follows: "§247-2 Basis and rate of tax. The tax imposed by section 247-1 shall be based on the actual and full consideration (whether cash or otherwise, including any promise, act, forbearance, property interest, value, gain, advantage, benefit, or profit), paid or to be paid for all transfers or conveyance of realty or any interest therein, that shall include any liens or encumbrances thereon at the time of sale, lease, sublease, assignment, transfer, or conveyance, and shall be at the following rates: (1) Except as provided in paragraph (2): (A) [Ten cents per $100 for] For properties with a value of less than $600,000[;]: ten cents per $100; (B) [Twenty cents per $100 for] For properties with a value of at least $600,000, but less than $1,000,000[;]: twenty cents per $100; (C) [Thirty cents per $100 for] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: thirty cents per $100; (D) [Fifty cents per $100 for] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: fifty cents per $100; (E) [Seventy cents per $100 for] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $1.40 per $100; (F) [Ninety cents per $100 for] For properties with a value of at least $6,000,000, but less than $10,000,000[; and]: $2.70 per $100; and (G) [One dollar per $100 for] For properties with a value of $10,000,000 or greater[; and]: $4.00 per $100; and (2) For the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on property tax: (A) [Fifteen cents per $100 for] For properties with a value of less than $600,000[;]: fifteen cents per $100; (B) [Twenty-five cents per $100 for] For properties with a value of at least $600,000, but less than $1,000,000[;]: twenty-five cents per $100; (C) [Forty cents per $100 for] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: forty cents per $100; (D) [Sixty cents per $100 for] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: sixty cents per $100; (E) [Eighty-five cents per $100 for] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $1.70 per $100; (F) [One dollar and ten cents per $100 for] For properties with a value of at least $6,000,000, but less than $10,000,000[; and]: $3.30 per $100; and (G) [One dollar and twenty-five cents per $100 for] For properties with a value of $10,000,000 or greater[,]: $5.00 per $100, of such actual and full consideration; provided that in the case of a lease or sublease, this chapter shall apply only to a lease or sublease whose full unexpired term is for a period of five years or more, and in those cases, including [(where appropriate)], where appropriate, those cases where the lease has been extended or amended, the tax in this chapter shall be based on the cash value of the lease rentals discounted to present day value and capitalized at the rate of six per cent, plus the actual and full consideration paid or to be paid for any and all improvements, if any, that shall include on-site as well as off-site improvements, applicable to the leased premises; and provided further that the tax imposed for each transaction shall be [not] no less than $1." PART VII SECTION 8. The department of taxation shall have the authority to postpone the payment of the tax imposed under sections 5 and 6 of 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. SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 10. This Act shall take effect on July 1, 2021; provided that: (1) Section 2 shall apply to taxable years beginning after December 31, 2020; and (2) Sections 5 and 6 shall be repealed on June 30, 2023. |
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| 47 | + | PART I SECTION 1. The legislature finds that the virus known as SARS-CoV-2 causes a disease named coronavirus disease 2019 (COVID-19), which spread globally and was declared a pandemic by the World Health Organization on March 11, 2020. Upon reaching Hawaii's shores, the COVID‑19 outbreak disrupted the local economy, resulting in a budget shortfall that was estimated to exceed two billion dollars as of December of 2020. The legislature additionally finds that it is necessary to generate revenue to allow the State to meet its strategic goals, avoid furloughs and layoffs for state workers, and prevent disruptions to essential government services. While the current governor proposed furloughing state workers to manufacture approximately $300,000,000 in savings beginning in January of 2021, the university of Hawaii economic research organization has found that every $1 in state salary reductions results in a $1.50 decrease in overall economic activity. Accordingly, the purpose of this Act is to preserve essential services and prevent employment reductions by generating revenue for the State by: (1) Increasing the personal income tax rate and implementing a rate recapture mechanism that phases out lower tax brackets for high earners; (2) Increasing the tax on capital gains; (3) Increasing the corporate income tax and establishing a single corporate income tax rate; (4) Temporarily repealing certain general excise tax exemptions; and (5) Increasing conveyance taxes for the sale of properties valued at $1,000,000 or greater. PART II SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a) through (c) to read as follows: "(a) There is hereby imposed on the taxable income of every: (1) Taxpayer who files a joint return under section 235-93; and (2) Surviving spouse, a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $4,000 1.40% of taxable income Over $4,000 but $56.00 plus 3.20% of not over $8,000 excess over $4,000 Over $8,000 but $184.00 plus 5.50% of not over $16,000 excess over $8,000 Over $16,000 but $624.00 plus 6.40% of not over $24,000 excess over $16,000 Over $24,000 but $1,136.00 plus 6.80% of not over $32,000 excess over $24,000 Over $32,000 but $1,680.00 plus 7.20% of not over $40,000 excess over $32,000 Over $40,000 but $2,256.00 plus 7.60% of not over $60,000 excess over $40,000 Over $60,000 but $3,776.00 plus 7.90% of not over $80,000 excess over $60,000 Over $80,000 $5,356.00 plus 8.25% of excess over $80,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 $6,427.00 plus 8.25% of excess over $96,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $300,000 excess over $96,000 Over $300,000 but $23,257.00 plus 9.00% of not over $350,000 excess over $300,000 Over $350,000 but $27,757.00 plus 10.00% of not over $400,000 excess over $350,000 Over $400,000 $32,757.00 plus 11.00% of excess over $400,000. In the case of any taxable year beginning after December 31, 2020: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $200,000 excess over $96,000 Over $200,000 but $4,531.00 plus 9.00% of not over $300,000 excess over $72,000 Over $300,000 but $2,016.00 plus 10.00% of not over $400,000 excess over $38,400 Over $400,000 but $749.00 plus 11.00% of not over $450,000 excess over $19,200 Over $450,000 but $67.00 plus 12.00% of not over $500,000 excess over $4,800 Over $500,000 13.00% of all taxable income. (b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $3,000 1.40% of taxable income Over $3,000 but $42.00 plus 3.20% of not over $6,000 excess over $3,000 Over $6,000 but $138.00 plus 5.50% of not over $12,000 excess over $6,000 Over $12,000 but $468.00 plus 6.40% of not over $18,000 excess over $12,000 Over $18,000 but $852.00 plus 6.80% of not over $24,000 excess over $18,000 Over $24,000 but $1,260.00 plus 7.20% of not over $30,000 excess over $24,000 Over $30,000 but $1,692.00 plus 7.60% of not over $45,000 excess over $30,000 Over $45,000 but $2,832.00 plus 7.90% of not over $60,000 excess over $45,000 Over $60,000 $4,017.00 plus 8.25% of excess over $60,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 $4,820.00 plus 8.25% of excess over $72,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $225,000 excess over $72,000 Over $225,000 but $17,443.00 plus 9.00% of not over $262,500 excess over $225,000 Over $262,500 but $20,818.00 plus 10.00% of not over $300,000 excess over $262,500 Over $300,000 $24,568.00 plus 11.00% of excess over $300,000. In the case of any taxable year beginning after December 31, 2020: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $150,000 excess over $72,000 Over $150,000 but $3,398.00 plus 9.00% of not over $225,000 excess over $54,000 Over $225,000 but $1,512.00 plus 10.00% of not over $300,000 excess over $28,800 Over $300,000 but $562.00 plus 11.00% of not over $350,000 excess over $14,400 Over $350,000 but $50.00 plus 12.00% of not over $400,000 excess over $3,600 Over $400,000 13% of all taxable income. (c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $2,000 1.40% of taxable income Over $2,000 but $28.00 plus 3.20% of not over $4,000 excess over $2,000 Over $4,000 but $92.00 plus 5.50% of not over $8,000 excess over $4,000 Over $8,000 but $312.00 plus 6.40% of not over $12,000 excess over $8,000 Over $12,000 but $568.00 plus 6.80% of not over $16,000 excess over $12,000 Over $16,000 but $840.00 plus 7.20% of not over $20,000 excess over $16,000 Over $20,000 but $1,128.00 plus 7.60% of not over $30,000 excess over $20,000 Over $30,000 but $1,888.00 plus 7.90% of not over $40,000 excess over $30,000 Over $40,000 $2,678.00 plus 8.25% of excess over $40,000. In the case of any taxable year beginning after December 31, 2006: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 $3,214.00 plus 8.25% of excess over $48,000. In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $150,000 excess over $48,000 Over $150,000 but $11,629.00 plus 9.00% of not over $175,000 excess over $150,000 Over $175,000 but $13,879.00 plus 10.00% of not over $200,000 excess over $175,000 Over $200,000 $16,379.00 plus 11.00% of excess over $200,000. In the case of any taxable year beginning after December 31, 2020: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $100,000 excess over $48,000 Over $100,000 but $2,266.00 plus 9.00% of not over $150,000 excess over $36,000 Over $150,000 but $1,008.00 plus 10.00% of not over $200,000 excess over $19,200 Over $200,000 but $374.00 plus 11.00% of not over $250,000 excess over $9,600 Over $250,000 but $34.00 plus 12.00% of not over $300,000 excess over $2,400 Over $300,000 13.00% of all taxable income." PART III SECTION 3. Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows: "(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of: (1) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of: (A) The taxable income reduced by the amount of net capital gain, or (B) The amount of taxable income taxed at a rate below [7.25] eleven per cent, plus (2) A tax of [7.25] eleven per cent of the amount of taxable income in excess of the amount determined under paragraph (1). This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986." PART IV SECTION 4. Section 235-71, Hawaii Revised Statutes, is amended as follows: 1. By amending subsections (a) and (b) to read: "(a) A tax at the rates herein provided shall be assessed, levied, collected, and paid for each taxable year on the taxable income of every corporation, including a corporation carrying on business in partnership, except that in the case of a regulated investment company the tax is as provided by subsection (b) and further that in the case of a real estate investment trust as defined in section 856 of the Internal Revenue Code of 1954 the tax is as provided in subsection (d). "Corporation" includes any professional corporation incorporated pursuant to chapter 415A. The tax on all taxable income shall be at the rate of [4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent. (b) In the case of a regulated investment company there is imposed on the taxable income, computed as provided in sections 852 and 855 of the Internal Revenue Code but with the changes and adjustments made by this chapter (without prejudice to the generality of the foregoing, the deduction for dividends paid is limited to such amount of dividends as is attributable to income taxable under this chapter), a tax [consisting in the sum] of [the following: 4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent." 2. By amending subsection (d) to read: "(d) In the case of a real estate investment trust there is imposed on the taxable income, computed as provided in sections 857 and 858 of the Internal Revenue Code but with the changes and adjustments made by this chapter (without prejudice to the generality of the foregoing, the deduction for dividends paid is limited to such amount of dividends as is attributable to income taxable under this chapter), a tax [consisting in the sum] of [the following: 4.4 per cent if the taxable income is not over $25,000, 5.4 per cent if over $25,000 but not over $100,000, and on all over $100,000, 6.4] 9.6 per cent. In addition to any other penalty provided by law any real estate investment trust whose tax liability for any taxable year is deemed to be increased pursuant to section 859(b)(2)(A) or 860(c)(1)(A) after December 31, 1978, (relating to interest and additions to tax determined with respect to the amount of the deduction for deficiency dividends allowed) of the Internal Revenue Code shall pay a penalty in an amount equal to the amount of interest for which such trust is liable that is attributable solely to such increase. The penalty payable under this subsection with respect to any determination shall not exceed one-half of the amount of the deduction allowed by section 859(a), or 860(a) after December 31, 1978, of the Internal Revenue Code for such taxable year." PART V SECTION 5. Chapter 237, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows: "§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 July 1, 2021, through June 30, 2023: (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) Amounts received by sugarcane producers as described under section 237-24(14); (6) Amounts received from the loading, transportation, and unloading of agricultural commodities shipped interisland as described under section 237-24.3(1); (7) Amounts received or accrued from the loading or unloading of cargo as described under section 237‑24.3(3)(A); (8) Amounts received or accrued from tugboat and towage services as described under section 237-24.3(3)(B); (9) Amounts received or accrued from the transportation of pilots or governmental officials and other maritime‑related services as described under section 237‑24.3(3)(C); (10) Amounts received as rent for aircraft or aircraft engines used for interstate air transportation as described under section 237-24.3(11); (11) Amounts received by exchanges and exchange members as described under section 237-24.5; (12) Amounts received as high technology research and development grants under section 206M-15 as described under section 237-24.7(10); (13) Amounts received from the servicing and maintenance of aircraft or construction of aircraft service and maintenance facilities as described under section 237‑24.9; (14) Gross proceeds from the sale of the following: (A) Intoxicating liquor, as described under section 237-25(a)(1), to the United States (including any agency or instrumentality of the United States that is wholly owned or otherwise so constituted as to be immune from the levy of a tax under chapter 238 or 244D, but not including national banks) or any organization to which the sale is permitted by the proviso of "Class 3" of section 281-31 that is located on any Army, Navy, or Air Force reservation; (B) Tobacco products and cigarettes, as described under section 237-25(a)(2), to the United States (including any agency or instrumentality thereof that is wholly owned or otherwise so constituted as to be immune from the levy of tax under chapter 238 or 245, but not including national banks); and (C) Other tangible personal property, as described under section 237-25(a)(3), to the United States (including any agency, instrumentality, or federal credit union thereof, but not including national banks) and any state‑chartered credit union; (15) Amounts received by petroleum product refiners from other refiners for further refining of petroleum products as described under section 237-27; (16) 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 July 1, 2021; (17) Gross proceeds received from shipbuilding and ship repairs as described under section 237‑28.1; (18) Amounts received by telecommunications common carriers from call center operators for interstate or foreign telecommunications services as described under section 237‑29.8; (19) 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 July 1, 2021; and (20) 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 (e), (f), or (g), there is levied, assessed, and collected annually against a taxpayer receiving or deriving previously exempt gross income or gross proceeds of sale from July 1, 2021, to June 30, 2023, a tax at the rate of four per cent on that previously exempt gross income or gross proceeds of sale. (c) The taxpayer against whom the tax is levied and assessed under this section shall be responsible for payment of the tax to the director of taxation. (d) 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). (e) This section shall not apply to gross income or gross proceeds from binding written contracts entered into prior to July 1, 2021, that do not permit the passing on of increased rates of taxes. (f) This section shall not apply to gross income or gross proceeds from stevedoring services and related services, as defined in section 382-1, furnished to a company by its wholly owned subsidiary. (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 is 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. (i) The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91 to effectuate this section. (j) 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). §237- Information reporting. Beginning July 1, 2021, the director of taxation 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 6. 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 July 1, 2021, through June 30, 2023: (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 section 238-1, paragraph (6) of the definition of "use"; (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 section 238-1, paragraph (7) of the definition of "use"; (3) The use of material, parts, or tools imported or purchased by a person licensed under chapter 237 that are used for aircraft service and maintenance or the construction of an aircraft service and maintenance facility, as described under section 238-1, paragraph (8) of the definition of "use"; (4) The use or sale of intoxicating liquor and cigarettes 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 (e) or (f), there is levied, assessed, and collected annually against a taxpayer who imports or purchases previously exempt property, services, or contracting for use in this State that becomes subject to the State's taxing jurisdiction from July 1, 2021, to June 30, 2023, a tax at the rate of four per cent on the value of that previously exempt property, services, or contracting. (c) The taxpayer against whom the tax is levied and assessed under this section shall be responsible for payment of the tax to the director of taxation. (d) Notwithstanding section 238-2.6, no county surcharge shall be levied, assessed, or collected on the value of any previously exempt property, services, or contracting that is subject to taxation under subsection (b). (e) This section shall not apply to any property, services, or contracting imported or purchased under binding written contracts entered into prior to July 1, 2021, that do not permit the passing on of increased rates of taxes. (f) 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. 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 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. (g) This chapter shall apply to the payment, collection, enforcement, and appeal of the tax levied under this section. (h) The director of taxation may establish additional requirements, procedures, and forms pursuant to rules adopted under chapter 91 to effectuate this section. (i) As used in this section, "previously exempt property, services, or contracting" means property, services, or contracting, the exemption for which is suspended under subsection (a). §238- Information reporting. Beginning July 1, 2021, the director of taxation 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." PART VI SECTION 7. Section 247-2, Hawaii Revised Statutes, is amended to read as follows: "§247-2 Basis and rate of tax. The tax imposed by section 247-1 shall be based on the actual and full consideration (whether cash or otherwise, including any promise, act, forbearance, property interest, value, gain, advantage, benefit, or profit), paid or to be paid for all transfers or conveyance of realty or any interest therein, that shall include any liens or encumbrances thereon at the time of sale, lease, sublease, assignment, transfer, or conveyance, and shall be at the following rates: (1) Except as provided in paragraph (2): (A) [Ten cents per $100 for] For properties with a value of less than $600,000[;]: ten cents per $100; (B) [Twenty cents per $100 for] For properties with a value of at least $600,000, but less than $1,000,000[;]: twenty cents per $100; (C) [Thirty cents per $100 for] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: sixty cents per $100; (D) [Fifty cents per $100 for] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: $1.00 per $100; (E) [Seventy cents per $100 for] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $1.40 per $100; (F) [Ninety cents per $100 for] For properties with a value of at least $6,000,000, but less than $10,000,000[; and]: $1.80 per $100; and (G) [One dollar per $100 for] For properties with a value of $10,000,000 or greater[; and]: $2.00 per $100; and (2) For the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on property tax: (A) [Fifteen cents per $100 for] For properties with a value of less than $600,000[;]: fifteen cents per $100; (B) [Twenty-five cents per $100 for] For properties with a value of at least $600,000, but less than $1,000,000[;]: twenty-five cents per $100; (C) [Forty cents per $100 for] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: eighty cents per $100; (D) [Sixty cents per $100 for] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: $1.20 per $100; (E) [Eighty-five cents per $100 for] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $1.70 per $100; (F) [One dollar and ten cents per $100 for] For properties with a value of at least $6,000,000, but less than $10,000,000[; and]: $2.20 per $100; and (G) [One dollar and twenty-five cents per $100 for] For properties with a value of $10,000,000 or greater[,]: $2.50 per $100, of such actual and full consideration; provided that in the case of a lease or sublease, this chapter shall apply only to a lease or sublease whose full unexpired term is for a period of five years or more, and in those cases, including [(where appropriate)], where appropriate, those cases where the lease has been extended or amended, the tax in this chapter shall be based on the cash value of the lease rentals discounted to present day value and capitalized at the rate of six per cent, plus the actual and full consideration paid or to be paid for any and all improvements, if any, that shall include on-site as well as off-site improvements, applicable to the leased premises; and provided further that the tax imposed for each transaction shall be [not] no less than $1." PART VII SECTION 8. The department of taxation shall have the authority to postpone the payment of the tax imposed under sections 5 and 6 of 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. SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 10. This Act shall take effect on July 1, 2021; provided that: (1) Section 2 shall apply to taxable years beginning after December 31, 2020; and (2) Sections 5 and 6 shall be repealed on June 30, 2023. INTRODUCED BY: _____________________________ |
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