§239-6  Airlines, certain carriers. (a)  There shall be levied and assessed upon each airline a tax of four percent of its gross income each year from the airline business; provided that ifan airline adopts a rate schedule for students in grade twelve or belowtraveling in school groups providing such students at reasonable hours a rateless than one-half of the regular adult fare, the tax shall be three per centof its gross income each year from the airline business.

(b)  There shall be levied and assessed uponeach motor carrier, each common carrier by water, and upon each contractcarrier other than a motor carrier, a tax of four per cent of its gross incomeeach year from the motor carrier or contract carrier business.

(c)  The tax imposed by this section is a meansof taxing the personal property of the airline or other carrier, tangible andintangible, including going concern value, and is in lieu of the tax imposed bychapter 237 but is not in lieu of any other tax.

(d)  Notwithstanding subsections (a), (b), and(c), the rate of tax upon the portion of the gross income of a motor carrierwhich consists of the receipts from the sale of its products or services to acontractor shall be as follows:

(1)  In calendar year 2000, 3.5 per cent;

(2)  In calendar year 2001, 3.0 per cent;

(3)  In calendar year 2002, 2.5 per cent;

(4)  In calendar year 2003, 2.0 per cent;

(5)  In calendar year 2004, 1.5 per cent;

(6)  In calendar year 2005, 1.0 per cent; and

(7)  In calendar year 2006, and thereafter, 0.5 percent;

provided that there is a resale of the products orservices and the resale by the contractor is subject to taxation at the highestrate under section 237-13; the gross income of the motor carrier is not dividedas provided in the definition of "gross income" in section 239-2 forthe tax imposed under this chapter or chapter 237; and the gross income of themotor carrier from the sale of its products or services to the contractor isnot subject to a deduction under chapter 237 by the contractor; and in the caseof services provided by the motor carrier, the benefit of the service passes tothe customer of the contractor as an identifiable element of the contracting orservice provided by the contractor and does not constitute overhead as definedin section 237-1.

The department shall have the authority toimplement the tax rate changes in paragraphs (1) through (7) by prescribing taxforms and instructions that require tax reporting and payment by deduction,allocation, or any other method to determine tax liability with due regard tothe tax rate changes.

For purposes of this subsection,"contractor" has the same meaning as defined in section 237-6.

(e)  Notwithstanding subsections (a) through(d), beginning on October 1, 2001, the tax under this chapter shall not applyto airlines, motor carriers, common carriers by water, and contract carriersother than motor carriers; provided that the gross income received on or afterOctober 1, 2001, by these carriers shall be subject to the tax imposed under chapter237.  For the taxable year in which October 1, 2001 occurs, the tax imposed anddue under this chapter for the affected carriers shall be abated in an amountequal to:

(1)  The tax imposed on the first day of thetaxpayer's taxable year in which October 1, 2001 occurs;

(2)  Divided by the number of months in the taxpayer'saffected taxable year; and

(3)  Multiplied by the number of months in thetaxpayer's taxable year remaining after September 30, 2001. [L 1963, c 147,§2(f); am L 1965, c 155, §18; Supp, §126-5.1; HRS §239-6; am L 1968, c 59, §3;am L 1970, c 180, §22; am L 2000, c 198, §15; am L Sp 2001 3d, c 9, §4; am L2003, c 135, §8]

 

Case Notes

 

  Federal law preempts gross receipts tax on air transportationor carriage of persons in air commerce.  464 U.S. 7.

  Commissions retained by airline's travel agents areincludible in airline's gross income for purposes of imposing tax.  56 H. 626,547 P.2d 586.

  Section does not burden commerce unduly, and is not preemptedby federal law.  65 H. 1, 647 P.2d 263.

  Federal Aviation Act did not preempt State's power, underthis section, to tax gross receipts attributable to the ground transportationportion of air packages that common carrier transported interisland and/orbetween Hawaii and the mainland.  88 H. 336, 966 P.2d 648.