STAND. COM. REP. 288

Honolulu, Hawaii

, 2003

RE: H.B. No. 1394

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred H.B. No. 1394 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION TO STIMULATE THE ECONOMY,"

begs leave to report as follows:

The purpose of this bill is to provide construction project tax incentives for the development of all commercial construction projects, with enhanced tax credits for large-scale projects. Specifically, a taxpayer incurring qualified construction project costs of:

(1) Up to $10,000,000 would qualify for a nonrefundable, carry-forward 4 percent credit of the costs incurred in each taxable year; and

(2) More than $10,000,000 would qualify for a nonrefundable, carry-forward 10 percent credit incurred in each taxable year of the consecutive five-year period.

This measure allows the credit to be deductible from any tax liability under the income tax, general excise tax, transient accommodations tax, use tax, public service company tax, taxation of banks and other financial corporations, and insurance code. In addition, the tax incentives available under this bill would only be applicable until January 1, 2011.

AIA Hawaii State Council, the Chamber of Commerce of Hawaii, Cendant Corporation/Fairfield Resorts, Hawaii Business Roundtable, Hawaii Construction Industry Association, Marc Hotels & Resorts, Paul Louie & Associates, Inc., Subcontractors Association of Hawaii, Retail Merchants of Hawaii, General Contractors Association of Hawaii, Pacific Resource Partnership, and Waikiki Improvement Association supported this bill.

The Department of Taxation and Tax Foundation of Hawaii offered comments.

Your Committee has amended this bill by:

(1) Clarifying that qualified construction projects will also be exempt from the general excise tax, transient accommodations tax, use tax, public service company tax, taxation of banks and other financial corporations, and insurance code;

(2) Clarifying that the bill takes effect on July 1, 2003, and applies to taxable years beginning after December 31, 2002, and ending before January 1, 2011;

(3) Repealing the bill on January 1, 2011, and reenacting sections 237D-3 and 238-2, Hawaii Revised Statutes, in the forms in which they read on June 30, 2003; and

(4) Making other technical, nonsubstantive amendments for purposes of clarity, style, and conformity.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1394, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1394, H.D. 1, and be referred to the Committee on Finance.

 

Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,

 

____________________________

BRIAN SCHATZ, Chair