Relating To The General Excise Tax.
SB1130 would create a temporary general excise tax exemption for sales of construction rebuilding materials used to rebuild or reconstruct residential or commercial properties in federally declared disaster areas in Hawaii. The exemption would apply only to materials purchased between July 1, 2025, and December 31, 2028, and would cover common construction inputs such as lumber, steel, concrete, roofing, plumbing fixtures, and electrical systems.
The bill is aimed at reducing rebuilding costs and speeding recovery in disaster-affected communities, which the legislature says are facing unusually high construction prices, supply-chain disruptions, and possible tariff-related cost increases. It also limits the exemption to rebuilding work, excludes materials for new development or out-of-state use, and requires third-party certification for qualifying projects. The measure would take effect on January 1, 2026, and sunset on December 31, 2028.
If enacted, SB1130 would amend Chapter 237, Hawaii Revised Statutes, by adding a new exemption from the general excise tax for qualifying disaster-rebuilding materials. This would reduce tax liability for homeowners, businesses, contractors, and suppliers involved in reconstruction projects in federally declared disaster areas that existed as of August 8, 2023. The Department of Taxation would need to administer the exemption, including determining proportional use when materials are used for both qualifying and nonqualifying purposes, and the bill would create a temporary, time-limited tax preference that expires at the end of 2028.
The available legislative history suggests generally favorable sentiment toward the bill’s disaster-recovery purpose. The measure passed the Senate Public Safety, Intergovernmental and Military Affairs Committee 5-0 with amendments, indicating unanimous support in that committee. The bill’s findings frame the exemption as a response to urgent rebuilding needs and high construction costs, which likely contributed to its positive reception.
The main policy questions appear to be about scope and administration rather than whether disaster recovery should be supported. Potential points of contention include limiting the exemption to federally declared disaster areas that existed as of August 8, 2023, excluding new construction and non-Hawaii use, and requiring third-party certification to verify eligibility. Another possible issue is fiscal impact, since the bill would reduce general excise tax collections for a defined set of reconstruction projects, though no specific opposition is reflected in the provided record.