Hawaii Introduces SST Conformity Legislation

The Hawaii House of Representatives has introduced legislation to conform Hawaii’s general excise tax laws to the provisions of the Streamlined Sales and Use Tax (SST) Agreement. Hawaii, an advisor state on the SST Governing Board, could petition to become a full member state if this legislation is enacted.

The new legislation was proposed using advice from the SST Governing Board and the Council On State Taxation (COST). In order to satisfy the single state tax rate requirement, the legislation would:

– move the 0.5% tax rate for wholesale transactions to a new chapter;
– add a new chapter on the taxation of imports of property, services, and contracting;
– move the 0.15% tax on insurance producers to a new chapter; and
– eliminate the tax on businesses owned by disabled persons.

The new legislation also provides for destination-based sourcing and amnesty.

Similar legislation was passed by the legislature in 2009, but later vetoed by Gov. Linda Lingle. The Senate voted to override the veto, but the House of Representatives declined to override the veto. (H.B. 2352, as introduced in the Hawaii House of Representatives on January 22, 2010; S.B. 2405, as introduced in the Hawaii Senate on January 22, 2010)

Posted on March 1, 2010