RELATING TO THE MOTOR VEHICLE RENTAL INDUSTRY.

SB29

THE SENATE

S.B. NO.

29

THIRTY-THIRD LEGISLATURE, 2025

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.
�
Act 137,
Session Laws of Hawaii 2017 (Act 137), established vehicle license recovery
fees and allowed motor vehicle lessors to pass vehicle license recovery fees on
to lessees.
�
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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Prior to Act 137, the motor vehicle rental
industry was only allowed to visibly pass on to lessees recurring costs, including
general excise taxes, license and registration fees, surcharge taxes, and rents
and fees payable to the department of transportation.
�
Act 137 allowed for the passing on of fixed,
one-time costs of doing business, including license plate fees and use taxes, in
a departure from prior statutory policy favoring the visible pass-on of only
recurring government fees and taxes.

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In addition, the establishment of vehicle
license recovery fees created an unfair method for calculating passed-on
costs.
�
Prior to Act 137, section
437D-8.4, Hawaii Revised Statutes, authorized the pass-on of fees and taxes
prorated at 1/365th of the annual fees and taxes paid on the particular motor
vehicle being rented.
�
Thus, the lessee
was charged only the amount of fees and taxes directly attributable to the
lessee's use of the vehicle.
�
Act 137's
increased prorated rate of 1/292nd of vehicle license recovery fees has
resulted in overpayments by individual lessees.

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The legislature further finds that vehicle
license recovery fees are an attempt by 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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Therefore, the purpose of this Act is to:

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(1)
�
Repeal
the definition of "vehicle license recovery fees";

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(2)
�
Repeal
the amendments made to section 437D-8.4, Hawaii Revised Statutes, by Act 137;
and

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(3)
�
Repeal

the requirement that rental car companies submit annual audits
to the office of consumer protection of the department of commerce and consumer
affairs

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SECTION
2
.
�
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
.
�
Section 437D-8.4, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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"(a)
�

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

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

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(2)
�
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)
�
The
surcharge taxes imposed in chapter 251 attributable to the transaction;

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(4)
�
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)
�
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:

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

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(B)
�
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)
�
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)
�
For all airport locations; and

������������
(ii)
�
For each airport location;

���������
(D)
�
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:

�������������
(i)
�
For all airport locations;

������������
(ii)
�
For each airport location; and

�����������
(iii)
�
For each lessee;

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

���������
(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.

���������
The respective departments, in their
sole discretion, may extend the time to submit the statement required in this
subsection.
�
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.
�
The
cost per hour shall be $40 or as may be established by rules adopted by the
director.
�
The lessor shall pay the
amounts billed within thirty days following the billing.
�
All moneys collected by the director shall be
credited to the compliance resolution fund."

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SECTION 4.
�

Act 137, Session Laws of Hawaii 2017, is amended by repealing section 5.

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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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SECTION 5.
�

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

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SECTION 6.
�

This Act shall take effect upon its approval; 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; Fees; Weight Taxes

Description:

Repeals
the definition of "vehicle license recovery fees".
�
Limits to vehicle license and registration
fees and weight taxes the fees and taxes that a motor vehicle lessor may pass
on to a lessee.
�
Amends the prorated
amount of vehicle license and registration fees and weight taxes that a motor
vehicle lessor may pass on to a lessee.
�

Repeals the requirement that rental car companies submit annual audits
to the Office of Consumer Protection of the Department of Commerce and Consumer
Affairs.

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