S.R. 125 Summary

• Requests the Department of Business, Economic Development, and Tourism, in consultation with the Department of Budget and Finance and Department of Taxation, to study the economic impact of exempting sales of goods and services to the federal government from Hawaii's general excise tax.

• Directs the study to analyze potential increases in economic activity, including job creation, personal and corporate income, and tax revenues resulting from such an exemption.

• Notes that Hawaii, Washington, and Vermont are the only three states that currently apply general excise tax to businesses providing goods and services to the federal government.

• Highlights that Hawaii businesses face a competitive disadvantage compared to out-of-state vendors when bidding on federal contracts, as out-of-state businesses are not effectively subject to the tax.

• Requires the Director of Business, Economic Development, and Tourism to submit findings, recommendations, proposed legislation, and methodology to the Legislature no later than twenty days before the 2017 Regular Session.