HB2879 Summary

• Imposes a 1% state surcharge on gross income or gross proceeds from state contracts funded by state non-general funds (excludes general fund revenues).

• Applies surcharge to general excise tax, public service company tax, and insurance premium tax; for insurance, surcharge rate is 25% of the applicable tax rate under HRS §431:7-202.

• Allows state departments to retain surcharge amounts from contractor payments and transmit directly to the director of taxation through memorandum of agreement.

• All surcharge proceeds deposited into the state general fund; surcharge amount excluded from taxable income for tax calculation purposes.

• Takes effect July 1, 2010 and automatically repeals June 30, 2015; affected statutory sections revert to prior language upon repeal.