RELATING TO THE MOTOR VEHICLE RENTAL INDUSTRY.

SB2216

THE SENATE

S.B. NO.

2216

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating to THE motor vehicle rental industry.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The
legislature finds that Act 137, Session Laws of Hawaii 2017 (Act 137),
established vehicle license recovery fees and authorized the lessors of rental
vehicles to pass these fees on to lessees.
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Vehicle license recovery fees include motor vehicle weight taxes; fees
connected with the registration of specially constructed, reconstructed, or
rebuilt vehicles; special interest vehicles or imported vehicles; license plate
and emblem fees; inspection fees; highway beautification fees; and any use
tax.
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As indicated above, vehicle license
recovery fees often include a lessor's fixed, one-time costs of doing business.

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The legislature further finds that, prior
to Act 137, the car rental industry was only allowed to visibly pass on
recurring costs, such as general excise taxes, license and registration fees,
surcharge taxes, and rents and fees payable to the department of
transportation.
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Authorizing the passing
on of fixed, one-time business costs, such as license plate fees and use taxes,
represented a departure from prior statutory policy, which authorized the
visible passing on of only recurring government fees and taxes.

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The legislature recognizes that the
establishment of vehicle license recovery fees created an unfair method for
calculating the costs passed on to consumers.
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Prior to Act 137, the law authorized the passing on of fees and taxes
prorated at 1/365th of the annual fees and taxes actually paid on the
particular motor vehicle being rented.
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Thus, the lessee was charged only the amount of fees and taxes directly
attributable to the lessee's use of the vehicle.
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Act 137 increased the prorated rate to
1/292nd of vehicle license recovery fees, resulting in overpayments by
individual lessees.

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The legislature also finds that vehicle
license recovery fees enable rental car companies to advertise low base rates
but subtly increase the actual per-day rental rate by greatly increasing the
applicable taxes and fees passed on to lessees, which may be detrimental to
Hawaii's tourism industry.

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Accordingly, the purpose of this Act is to:

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(1)
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Repeal
vehicle license recovery fees;

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(2)
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Reauthorize
passing on to lessees only recurring costs attributable to certain governmental
fees that were in effect prior to Act 137; and

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(3)
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Reinstate
the prorated amount of vehicle license and registration fees and weight taxes
that may be passed on to lessees, that was in effect prior to Act 137.

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SECTION
2
.
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Section 437D-3, Hawaii Revised Statutes, is
amended by deleting the definition of "vehicle license recovery fees".

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["
"Vehicle license recovery
fees" includes motor vehicle weight taxes under section 249-2; fees
connected with the registration of specially constructed, reconstructed, or
rebuilt vehicles, special interest vehicles, or imported vehicles as referenced
in section 286-41(c); license plate and emblem fees under section 249-7(b);
inspection fees as referenced in section 286-26; highway beautification fees as
referenced in section 286-51(b)(1); and any use tax under chapter 238.
"]

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SECTION
3.
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Section 437D-8.4, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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"(a)
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Notwithstanding any law to
the contrary, a lessor may visibly pass on to a lessee:

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(1)
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The
general excise tax attributable to the transaction;

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(2)
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The
vehicle [
license recovery fees,
]
and registration fee and weight
taxes,
prorated at [
1/292nd
]
1/365th
of the annual vehicle
license [
recovery fees
]
and registration fee and weight taxes

actually paid on the particular vehicle being rented for each full or partial
twenty-four-hour rental day that the vehicle is rented; provided
that

the total of all vehicle license [
recovery
]
and registration
fees
charged to all lessees shall not exceed the annual vehicle license [
recovery
fees
]
and registration fee
actually paid for the particular vehicle
rented;

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(3)
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The
surcharge taxes imposed in chapter 251 attributable to the transaction;

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(4)
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The
county surcharge on state tax under section 46‑16.8; provided that the
lessor itemizes the tax for the lessee; and

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(5)
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The
rents or fees paid to the department of transportation under concession
contracts negotiated pursuant to chapter 102, service permits granted pursuant
to title 19, Hawaii Administrative Rules, or rental motor vehicle customer
facility charges established pursuant to section 261-7; provided that:

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(A)
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The
rents or fees are limited to amounts that can be attributed to the proceeds of
the particular transaction;

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(B)
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The
rents or fees shall not exceed the lessor's net payments to the department of
transportation made under concession contract or service permit;

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(C)
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The
lessor submits to the department of transportation and the department of
commerce and consumer affairs a statement, verified by a certified public
accountant as correct, that reports the amounts of the rents or fees paid to
the department of transportation pursuant to the applicable concession contract
or service permit:

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(i)
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For all airport locations; and

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(ii)
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For each airport location;

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(D)
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The
lessor submits to the department of transportation and the department of
commerce and consumer affairs a statement, verified by a certified public
accountant as correct, that reports the amounts charged to lessees:

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(i)
�
For all airport locations;

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(ii)
�
For each airport location; and

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(iii)
�
For each lessee;

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(E)
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The
lessor includes in these reports the methodology used to determine the amount
of fees charged to each lessee; and

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(F)
�
The
lessor submits the above information to the department of transportation and
the department of commerce and consumer affairs within three months of the end
of the preceding annual accounting period or contract year as determined by the
applicable concession agreement or service permit.

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The respective departments, in their
sole discretion, may extend the time to submit the statement required in this
subsection.
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If the director determines
that an examination of the lessor's information is inappropriate under this
subsection and the lessor fails to correct the matter within ninety days, the
director may conduct an examination and charge a lessor an examination fee
based upon the cost per hour per examiner for evaluating, investigating, and
verifying compliance with this subsection, as well as additional amounts for
travel, per diem, mileage, and other reasonable expenses incurred in connection
with the examination, which shall relate solely to the requirements of this
subsection, and which shall be billed by the departments as soon as feasible
after the close of the examination.
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The
cost per hour shall be $40 or as may be established by rules adopted by the
director.
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The lessor shall pay the
amounts billed within thirty days following the billing.
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All moneys collected by the director shall be
credited to the compliance resolution fund."

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SECTION 4.
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Act 137, Session Laws of Hawaii 2017, is amended by amending section 5
to read as follows:

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"SECTION
5.
�
[
Beginning March 1, 2019, all
rental car companies shall submit an annual audit, to be conducted by a third
party certified public accountant, to the office of consumer protection of the
department of commerce and consumer affairs by July 1 of every year.
]
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Repealed.
"

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SECTION 5.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 6.
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This Act shall take effect on January 1, 2051; provided that the
amendments made to section 437D-8.4(a), Hawaii Revised Statutes, by section 3
of this Act shall not be repealed when that section is reenacted on December
31, 2030, pursuant to section 9 of Act 247, Session Laws of Hawaii 2005, as amended
by section 7 of Act 240, Session Laws of Hawaii 2015, as amended by section 6
of Act 1, Special Session Laws of Hawaii 2017.

INTRODUCED BY:

_____________________________

Report Title:

Motor
Vehicle Rental Industry; Vehicle License Recovery Fees; Rental Car Companies;
Annual Audit; Repeal

Description:

Repeals vehicle license recovery fees.
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Reinstates certain costs of fees and taxes
that may be passed on to lessees.
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Effective
1/1/2051.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.