Hawaii 2023 Regular Session

Hawaii Senate Bill SB335 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	THE SENATE S.B. NO. 335 THIRTY-SECOND LEGISLATURE, 2023 STATE OF HAWAII A BILL FOR AN ACT relating to motor vehicle rental industry. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
2	2
3	3	THE SENATE S.B. NO. 335
4	4	THIRTY-SECOND LEGISLATURE, 2023
5	5	STATE OF HAWAII
6	6
7	7	THE SENATE
8	8
9	9	S.B. NO.
10	10
11	11	335
12	12
13	13	THIRTY-SECOND LEGISLATURE, 2023
14	14
15	15
16	16
17	17	STATE OF HAWAII
18	18
19	19
20	20
21	21
22	22
23	23
24	24
25	25
26	26
27	27
28	28
29	29
30	30
31	31	A BILL FOR AN ACT
32	32
33	33
34	34
35	35
36	36
37	37	relating to motor vehicle rental industry.
38	38
39	39
40	40
41	41
42	42
43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
44	44
45	45
46	46
47	47	SECTION 1. Act 137, Session Laws of Hawaii 2017 (Act 137), established vehicle license recovery fees and allows the lessors of rental vehicles to pass vehicle license recovery fees on to lessees. Vehicle license recovery fees include motor vehicle weight taxes; fees connected with the registration of specially constructed, reconstructed, or rebuilt vehicles; special interest vehicles or imported vehicles; license plate and emblem fees; inspection fees; highway beautification fees; and any use tax. As indicated above, vehicle license recovery fees often include a lessor's fixed, one-time costs of doing business. Prior to Act 137, the car rental industry was only allowed to visibly pass on recurring costs, such as general excise taxes, license and registration fees, surcharge taxes, and rents and fees payable to the department of transportation. Thus, allowing the passing on of fixed, one-time costs of doing business, such as license plate fees and use taxes, is a departure from prior statutory policy favoring the visible pass on of only recurring government fees and taxes. In addition, the establishment of vehicle license recovery fees created an unfair method for calculating passed-on costs. Prior to Act 137, the law authorized the pass on of fees and taxes prorated at 1/365th of the annual fees and taxes actually paid on the particular motor vehicle being rented. Thus, the lessee was charged only the amount of fees and taxes directly attributable to their use of the vehicle. Because Act 137 increased the prorated rate to 1/292nd of vehicle license recovery fees, this has resulted in overpayments by individual lessees. The legislature further finds that vehicle license recovery fees are an attempt by rental car companies to advertise low base rates but subtly increase the actual per day rental rate by greatly increasing the applicable taxes and fees passed on to lessees, which may be detrimental to Hawaii's tourism industry. The purpose of this Act is to: (1) Repeal vehicle license recovery fees; (2) Reinstate recurring costs attributable to certain governmental fees that may be passed on to lessees that were allowed prior to Act 137; and (3) Reinstate the prorated amount of vehicle license and registration fee and weight taxes that may be passed on to lessees, as was allowed prior to Act 137. SECTION 2. Section 437D-3, Hawaii Revised Statutes, is amended by deleting the definition of "vehicle license recovery fees". [""Vehicle license recovery fees" includes motor vehicle weight taxes under section 249-2; fees connected with the registration of specially constructed, reconstructed, or rebuilt vehicles, special interest vehicles, or imported vehicles as referenced in section 286-41(c); license plate and emblem fees under section 249-7(b); inspection fees as referenced in section 286-26; highway beautification fees as referenced in section 286-51(b)(1); and any use tax under chapter 238."] SECTION 3. Section 437D-8.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: "(a) Notwithstanding any law to the contrary, a lessor may visibly pass on to a lessee: (1) The general excise tax attributable to the transaction; (2) The vehicle license [recovery fees,] and registration fee and weight taxes, prorated at [1/292nd] 1/365th of the annual vehicle license [recovery fees] and registration fee and weight taxes actually paid on the particular vehicle being rented for each full or partial twenty-four-hour rental day that the vehicle is rented; provided that the total of all vehicle license [recovery fees] and registration fees charged to all lessees shall not exceed the annual vehicle license [recovery fees] and registration fee actually paid for the particular vehicle rented; (3) The surcharge taxes imposed in chapter 251 attributable to the transaction; (4) The county surcharge on state tax under section 46-16.8; provided that the lessor itemizes the tax for the lessee; and (5) The rents or fees paid to the department of transportation under concession contracts negotiated pursuant to chapter 102, service permits granted pursuant to title 19, Hawaii Administrative Rules, or rental motor vehicle customer facility charges established pursuant to section 261-7; provided that: (A) The rents or fees are limited to amounts that can be attributed to the proceeds of the particular transaction; (B) The rents or fees shall not exceed the lessor's net payments to the department of transportation made under concession contract or service permit; (C) The lessor submits to the department of transportation and the department of commerce and consumer affairs a statement, verified by a certified public accountant as correct, that reports the amounts of the rents or fees paid to the department of transportation pursuant to the applicable concession contract or service permit: (i) For all airport locations; and (ii) For each airport location; (D) The lessor submits to the department of transportation and the department of commerce and consumer affairs a statement, verified by a certified public accountant as correct, that reports the amounts charged to lessees: (i) For all airport locations; (ii) For each airport location; and (iii) For each lessee; (E) The lessor includes in these reports the methodology used to determine the amount of fees charged to each lessee; and (F) The lessor submits the above information to the department of transportation and the department of commerce and consumer affairs within three months of the end of the preceding annual accounting period or contract year as determined by the applicable concession agreement or service permit. The respective departments, in their sole discretion, may extend the time to submit the statement required in this subsection. If the director determines that an examination of the lessor's information is inappropriate under this subsection and the lessor fails to correct the matter within ninety days, the director may conduct an examination and charge a lessor an examination fee based upon the cost per hour per examiner for evaluating, investigating, and verifying compliance with this subsection, as well as additional amounts for travel, per diem, mileage, and other reasonable expenses incurred in connection with the examination, which shall relate solely to the requirements of this subsection, and which shall be billed by the departments as soon as feasible after the close of the examination. The cost per hour shall be $40 or as may be established by rules adopted by the director. The lessor shall pay the amounts billed within thirty days following the billing. All moneys collected by the director shall be credited to the compliance resolution fund." SECTION 4. Act 137, Session Laws of Hawaii 2017, is amended by repealing section 5. ["SECTION 5. Beginning March 1, 2019, all rental car companies shall submit an annual audit, to be conducted by a third party certified public accountant, to the office of consumer protection of the department of commerce and consumer affairs by July 1 of every year."] SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 6. This Act shall take effect on January 1, 2024; provided that the amendments made to section 437D-8.4(a), Hawaii Revised Statutes, by section 3 of this Act shall not be repealed when that section is reenacted on December 31, 2030, pursuant to section 9 of Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, as amended by section 6 of Act 1, Special Session Laws of Hawaii 2017. INTRODUCED BY: _____________________________
48	48
49	49	SECTION 1. Act 137, Session Laws of Hawaii 2017 (Act 137), established vehicle license recovery fees and allows the lessors of rental vehicles to pass vehicle license recovery fees on to lessees. Vehicle license recovery fees include motor vehicle weight taxes; fees connected with the registration of specially constructed, reconstructed, or rebuilt vehicles; special interest vehicles or imported vehicles; license plate and emblem fees; inspection fees; highway beautification fees; and any use tax. As indicated above, vehicle license recovery fees often include a lessor's fixed, one-time costs of doing business.
50	50
51	51	Prior to Act 137, the car rental industry was only allowed to visibly pass on recurring costs, such as general excise taxes, license and registration fees, surcharge taxes, and rents and fees payable to the department of transportation. Thus, allowing the passing on of fixed, one-time costs of doing business, such as license plate fees and use taxes, is a departure from prior statutory policy favoring the visible pass on of only recurring government fees and taxes.
52	52
53	53	In addition, the establishment of vehicle license recovery fees created an unfair method for calculating passed-on costs. Prior to Act 137, the law authorized the pass on of fees and taxes prorated at 1/365th of the annual fees and taxes actually paid on the particular motor vehicle being rented. Thus, the lessee was charged only the amount of fees and taxes directly attributable to their use of the vehicle. Because Act 137 increased the prorated rate to 1/292nd of vehicle license recovery fees, this has resulted in overpayments by individual lessees.
54	54
55	55	The legislature further finds that vehicle license recovery fees are an attempt by rental car companies to advertise low base rates but subtly increase the actual per day rental rate by greatly increasing the applicable taxes and fees passed on to lessees, which may be detrimental to Hawaii's tourism industry.
56	56
57	57	The purpose of this Act is to:
58	58
59	59	(1) Repeal vehicle license recovery fees;
60	60
61	61	(2) Reinstate recurring costs attributable to certain governmental fees that may be passed on to lessees that were allowed prior to Act 137; and
62	62
63	63	(3) Reinstate the prorated amount of vehicle license and registration fee and weight taxes that may be passed on to lessees, as was allowed prior to Act 137.
64	64
65	65	SECTION 2. Section 437D-3, Hawaii Revised Statutes, is amended by deleting the definition of "vehicle license recovery fees".
66	66
67	67	[""Vehicle license recovery fees" includes motor vehicle weight taxes under section 249-2; fees connected with the registration of specially constructed, reconstructed, or rebuilt vehicles, special interest vehicles, or imported vehicles as referenced in section 286-41(c); license plate and emblem fees under section 249-7(b); inspection fees as referenced in section 286-26; highway beautification fees as referenced in section 286-51(b)(1); and any use tax under chapter 238."]
68	68
69	69	SECTION 3. Section 437D-8.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
70	70
71	71	"(a) Notwithstanding any law to the contrary, a lessor may visibly pass on to a lessee:
72	72
73	73	(1) The general excise tax attributable to the transaction;
74	74
75	75	(2) The vehicle license [recovery fees,] and registration fee and weight taxes, prorated at [1/292nd] 1/365th of the annual vehicle license [recovery fees] and registration fee and weight taxes actually paid on the particular vehicle being rented for each full or partial twenty-four-hour rental day that the vehicle is rented; provided that the total of all vehicle license [recovery fees] and registration fees charged to all lessees shall not exceed the annual vehicle license [recovery fees] and registration fee actually paid for the particular vehicle rented;
76	76
77	77	(3) The surcharge taxes imposed in chapter 251 attributable to the transaction;
78	78
79	79	(4) The county surcharge on state tax under section 46-16.8; provided that the lessor itemizes the tax for the lessee; and
80	80
81	81	(5) The rents or fees paid to the department of transportation under concession contracts negotiated pursuant to chapter 102, service permits granted pursuant to title 19, Hawaii Administrative Rules, or rental motor vehicle customer facility charges established pursuant to section 261-7; provided that:
82	82
83	83	(A) The rents or fees are limited to amounts that can be attributed to the proceeds of the particular transaction;
84	84
85	85	(B) The rents or fees shall not exceed the lessor's net payments to the department of transportation made under concession contract or service permit;
86	86
87	87	(C) The lessor submits to the department of transportation and the department of commerce and consumer affairs a statement, verified by a certified public accountant as correct, that reports the amounts of the rents or fees paid to the department of transportation pursuant to the applicable concession contract or service permit:
88	88
89	89	(i) For all airport locations; and
90	90
91	91	(ii) For each airport location;
92	92
93	93	(D) The lessor submits to the department of transportation and the department of commerce and consumer affairs a statement, verified by a certified public accountant as correct, that reports the amounts charged to lessees:
94	94
95	95	(i) For all airport locations;
96	96
97	97	(ii) For each airport location; and
98	98
99	99	(iii) For each lessee;
100	100
101	101	(E) The lessor includes in these reports the methodology used to determine the amount of fees charged to each lessee; and
102	102
103	103	(F) The lessor submits the above information to the department of transportation and the department of commerce and consumer affairs within three months of the end of the preceding annual accounting period or contract year as determined by the applicable concession agreement or service permit.
104	104
105	105	The respective departments, in their sole discretion, may extend the time to submit the statement required in this subsection. If the director determines that an examination of the lessor's information is inappropriate under this subsection and the lessor fails to correct the matter within ninety days, the director may conduct an examination and charge a lessor an examination fee based upon the cost per hour per examiner for evaluating, investigating, and verifying compliance with this subsection, as well as additional amounts for travel, per diem, mileage, and other reasonable expenses incurred in connection with the examination, which shall relate solely to the requirements of this subsection, and which shall be billed by the departments as soon as feasible after the close of the examination. The cost per hour shall be $40 or as may be established by rules adopted by the director. The lessor shall pay the amounts billed within thirty days following the billing. All moneys collected by the director shall be credited to the compliance resolution fund."
106	106
107	107	SECTION 4. Act 137, Session Laws of Hawaii 2017, is amended by repealing section 5.
108	108
109	109	["SECTION 5. Beginning March 1, 2019, all rental car companies shall submit an annual audit, to be conducted by a third party certified public accountant, to the office of consumer protection of the department of commerce and consumer affairs by July 1 of every year."]
110	110
111	111	SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
112	112
113	113	SECTION 6. This Act shall take effect on January 1, 2024; provided that the amendments made to section 437D-8.4(a), Hawaii Revised Statutes, by section 3 of this Act shall not be repealed when that section is reenacted on December 31, 2030, pursuant to section 9 of Act 247, Session Laws of Hawaii 2005, as amended by section 7 of Act 240, Session Laws of Hawaii 2015, as amended by section 6 of Act 1, Special Session Laws of Hawaii 2017.
114	114
115	115
116	116
117	117	INTRODUCED BY: _____________________________
118	118
119	119	INTRODUCED BY:
120	120
121	121	_____________________________
122	122
123	123
124	124
125	125
126	126
127	127
128	128
129	129
130	130
131	131
132	132
133	133
134	134
135	135
136	136
137	137
138	138
139	139
140	140
141	141
142	142
143	143
144	144
145	145
146	146
147	147
148	148
149	149
150	150
151	151	Report Title: Motor Vehicle Rental Industry; License Recovery Fees; Repeal Description: Repeals vehicle license recovery fees. Takes effect 1/1/2024. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
152	152
153	153
154	154
155	155
156	156
157	157	Report Title:
158	158
159	159	Motor Vehicle Rental Industry; License Recovery Fees; Repeal
160	160
161	161
162	162
163	163	Description:
164	164
165	165	Repeals vehicle license recovery fees. Takes effect 1/1/2024.
166	166
167	167
168	168
169	169
170	170
171	171
172	172
173	173	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.