Report Title:

Income Tax Credit; Establishing Practice in Underserved Areas


Provides a $1,000 per month income tax credit for primary health care providers who establish practices in state enterprise zones. The tax credit is limited to a period of five years. (HB1382 HD1)


H.B. NO.



H.D. 1






relating to tax credit incentives for health care providers.



SECTION 1. The legislature declares that the health, safety, and welfare of the people of this State are dependent upon the continual development, promotion, and expansion of market-based solutions for local area health care needs in certain communities. Through the provision of a short-term tax credit to private providers, the legislature finds that this approach is more cost-effective than placing government employees in critically underserved areas.

In addition, the tax credit provides a long-term solution by encouraging private practitioners to invest their own money and to establish roots in needy communities, ultimately expanding access to health care for thousands of people of this State.

The purpose of this Act is to establish an income tax credit of $1,000 per month, up to a maximum of sixty months, for primary health care providers who establish practices in certain designated state enterprise zones.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235- Primary health care practice tax credit. (a) There shall be allowed to each qualified primary health care provider, whether individual or corporate, subject to the income tax imposed by this chapter, a primary health care practice tax credit which shall be deductible from a qualified taxpayer's gross income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

The amount of the tax credit shall be $1,000 per month and shall be limited to a maximum period of sixty consecutive months.

To qualify for the credit under this section, the primary health care provider shall establish a new practice in a state enterprise zone under chapter 209E; provided that the primary health care provider is not a qualified business under chapter 209E and that the practice is located in any of the following enterprise zones:

(1) County of Hawaii;

(2) County of Kauai;

(3) County of Maui;

(4) North Shore, Oahu;

(5) Koolauloa, Oahu; and

(6) Leeward Coast, Oahu, encompassing the communities of Makaha, Waianae, Maili, and Nanakuli.

(b) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(c) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91.

(d) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(e) Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) For the purpose of this section, "primary health care provider" means any person licensed as a physician or surgeon under chapter 453 or 460, or any person licensed as a dentist under chapter 448."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2003.