Hawaii GET Exemptions on the Chopping Block

Among the nearly two dozen GET exemptions Hawaii lawmakers could suspend to help balance the budget, ending one that benefits general contractors would generate the most revenue — more than $135 million over the next two years.

The Senate already advanced House Bill 793, which proposes temporarily halting 22 exemptions that benefit businesses including general contractors, sugarcane producers, petroleum refiners and tugboat operators. It would require them to pay the 4 percent general excise tax "on the previously exempt gross income or gross proceeds of sale derived from January 1, 2012, to June 30, 2015." The bill is being vetted by a conference committee.

The measure could potentially bring in a total of $214 million in fiscal 2012 and another $220 million in 2013, according to estimates from the state Department of Taxation.

But the department says the revenue figure for 2012 could be closer to $173 million because eliminating the exemption for contractors might result in less subcontracting work. (Under the existing contracting exemption, a primary contractor can deduct amounts paid to subcontractors from gross receipts to calculate the amount subject to GET.)

Hawaii lawmakers are faced with a $1.3 billion budget shortfall over the next two years as they work to finalize a budget before an internal April 29 deadline.

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