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



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



(c)  The tax imposed by this section is a means
of taxing the personal property of the airline or other carrier, tangible and
intangible, including going concern value, and is in lieu of the tax imposed by
chapter 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 carrier
which consists of the receipts from the sale of its products or services to a
contractor 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 per
cent;



provided that there is a resale of the products or
services and the resale by the contractor is subject to taxation at the highest
rate under section 237-13; the gross income of the motor carrier is not divided
as provided in the definition of "gross income" in section 239-2 for
the tax imposed under this chapter or chapter 237; and the gross income of the
motor carrier from the sale of its products or services to the contractor is
not subject to a deduction under chapter 237 by the contractor; and in the case
of services provided by the motor carrier, the benefit of the service passes to
the customer of the contractor as an identifiable element of the contracting or
service provided by the contractor and does not constitute overhead as defined
in section 237-1.



The department shall have the authority to
implement the tax rate changes in paragraphs (1) through (7) by prescribing tax
forms and instructions that require tax reporting and payment by deduction,
allocation, or any other method to determine tax liability with due regard to
the 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 apply
to airlines, motor carriers, common carriers by water, and contract carriers
other than motor carriers; provided that the gross income received on or after
October 1, 2001, by these carriers shall be subject to the tax imposed under chapter
237.  For the taxable year in which October 1, 2001 occurs, the tax imposed and
due under this chapter for the affected carriers shall be abated in an amount
equal to:



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



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



(3)  Multiplied by the number of months in the
taxpayer'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 L
2003, c 135, §8]



 



Case Notes



 



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



  Commissions retained by airline's travel agents are
includible 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 preempted
by federal law.  65 H. 1, 647 P.2d 263.



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