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TAX MAN: Bills hit the home stretch after legislative adjournment

The Hawai‘i Legislature is done for the year. Its last day for this session was May 5. It has done all its work on new laws for this season. Some of the bills it finally passed have already been signed into law. Others are awaiting the governor’s action. Now the important deadlines are June 27, when the governor needs to give notice of intent to veto a bill, and July 12, which is the deadline for the governor to sign or veto any bills.

Some of the more consequential bills that now await the Governor’s action:

Senate Bill 514 proposes to give every resident a tax refund. The refund amount is $300 per exemption (which includes self, spouse, and dependents) or, for those households making $100,000 or more, $100 per exemption. To get the refund, a resident needs to file a 2021 income tax return on or before December 31, 2022. Many residents have already filed this return. If you are on extension, don’t delay too long! Also, the bill drops $300 million into the State‘s pension program and $500 million into the rainy day fund. We’ve previously covered this bill in a Frivolous Fable.

Senate Bill 3201 fundamentally changes the way tax-exempt organizations are treated under the GET law. For a nonprofit to be taxable under federal standards, it has to be conducting a business unrelated to its tax-exempt mission. For a nonprofit to be taxable under the GET, it only needed to be raising money. This bill will adopt the federal standards for the GET, making it easier for nonprofits to keep track of the rules. We wrote that this bill would be a game-changer for nonprofits.

House Bill 2511 authorizes a $600 million cash infusion into our Department of Hawaiian Home Lands, To many of the Native Hawaiians who had been patiently waiting for Hawaiian homestead lands for years or decades – more than 28,700 are on the list now – this historic funding seems to be a welcome relief. We pointed out that DHHL experienced some inability to spend down the money it was given; specifically federal funds. As we wrote earlier, we hope that DHHL can put that questionable past behind and do some good for the Native Hawaiians who benefit from the Hawaiian Homes Commission Act of 1920.

Senate Bill 3289 establishes the Hawaii Retirement Savings Program, a concept heavily pushed by AARP this year. The idea is for the State to establish a program that private sector companies and employees can opt into. For small employers that have to pay oodles of money to keep their own employee retirement plan going, it would be a chance for them to ditch their current plan and adopt the State plan, or for small employers who had given up on retirement plans for their workers because of the associated costs, it would be a chance for them to offer retirement plan benefits once again.

Senate Bill 2475 gives an exemption from the GET for stevedoring services, as well as wharfage and demurrage fees that are paid to the Department of Transportation. These fees are unique to the industry of transporting goods by sea. Some time ago, we noted that the federal government came out with an executive order against detention and demurrage charges, and argued that we really shouldn’t be taxing transportation of goods when we depend on that transportation for our very existence. This bill, by knocking the GET off these fees, should be a step toward lowering our stratospheric cost of living. It also promotes more equality between water and air transportation of goods because federal law prevents us from applying our GET to air transportation.

We’ll be covering more of these bills in articles to come.

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Tom Yamachika is president of the Tax Foundation of Hawai‘i.
Source: The Garden Island

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