Report Title:

Alternative fuels/Hybrid Motor Vehicles; Tax Credit

Description:

Provides an income tax credit for the purchase of hybrid vehicles or vehicles which use alternative fuels.

HOUSE OF REPRESENTATIVES

H.B. NO.

2851

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to taxation.

 

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

SECTION 1. The purpose of this Act is to encourage the use of alternative fuels and hybrid motor vehicles in Hawaii by establishing an income tax credit for the purchase of vehicles, including hybrid motor vehicles that use alternative fuels.

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

"§235- Income tax credit for purchase of vehicles using alternative fuels. (a) As used in this section, unless the context otherwise requires:

"Alternative fuel" has the same meaning as defined in section 243-1.

"Hybrid vehicle" means a motor vehicle with a hybrid propulsion system that uses an alternative fuel by operating on both an alternative fuel, including electricity, and a traditional fuel.

"Motor vehicle" means any self-propelled vehicle required to be licensed or subject to licensing for operation upon the highways of this State, including a vehicle that uses a hybrid propulsion system.

"Near zero-emitting vehicle" means a motor vehicle exhibiting emissions characteristics that are near those of a zero-emitting vehicle. To qualify as a near zero-emitting vehicle, a motor vehicle must meet at least one of the following minimum requirements:

(1) The vehicle must be certified by the United States Environmental Protection Agency as meeting an emission standard between the ultra-low-emitting vehicle emission standard and the zero-emitting vehicle emission standard; or

(2) The vehicle must be certified by the United States Environmental Protection Agency as meeting the federal ultra-low-emitting vehicle emission standard and must be certified by any state as provided in the Federal Clean Air Act to an emission standard between the ultra-low emitting vehicle emission standard and the zero-emitting vehicle emission standard.

"Power source" means the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and miscellaneous components.

"Traditional fuel" means gasoline or other petroleum-based motor fuel commonly used on the highways of this State.

"Uses an alternative fuel" or "to use an alternative fuel" means to operate solely on an alternative fuel, to operate on both an alternative fuel and a traditional fuel, or to operate alternately on a traditional fuel and an alternate fuel.

(b) With respect to tax years commencing after June 30, 2003, but prior to July 1, 2005, there shall be allowed to any person a credit against the tax imposed by this chapter for each motor vehicle owned by the person that:

(1) Is titled and registered in this State;

(2) Is used in connection with a business; and

(3) Uses or is converted to use as alternative fuel or has its power source replaced with a power source that uses an alternative fuel.

(c) With respect to tax years commencing after June 30, 2005, but prior to July 1, 2016, there shall be allowed to any person a credit against the tax imposed by this chapter for each motor vehicle owned by the person that:

(1) Is titled and registered in this State; and

(2) Uses or is converted to use an alternative fuel, is a hybrid vehicle, or has its power source replaced with a power source that uses an alternative fuel.

(d) The amount of the credit allowed pursuant to this section shall be an amount equal to the percentage, as set forth in subsection (e), of the following:

(1) The difference between the actual cost incurred by the person during the tax year in purchasing a motor vehicle that uses an alternative fuel and the costs of the same motor vehicle that uses a traditional fuel or, if the same vehicle is not available, then the cost of the most similar vehicle, taking into account the model, make, engine size, and options, that uses a traditional fuel;

(2) The difference between the actual cost incurred by the person during the tax year in replacing an existing power source in a motor vehicle that uses a traditional fuel with a power source that uses an alternative fuel and the cost of replacing the existing power source in the motor vehicle with the same type of power source that uses a traditional fuel; or

(3) The actual cost incurred by the person during the tax year in converting the motor vehicle to a fuel system that uses an alternative fuel.

(e) (1) For the purposes of subsection (d), except as otherwise provided in paragraph (2), the percentage of the difference in actual cost incurred or the percentage of the actual costs incurred that may be claimed as a credit pursuant to subsection (c) shall be as follows:

(A) For tax years commencing after June 30, 2003, but prior to July 1, 2011:

(i) Low-emitting vehicles: fifty per cent;

(ii) Ultra-low-emitting vehicles or inherently low-emitting vehicles: seventy-five per cent; and

(iii) Zero-emitting vehicles, eighty-five per cent;

(B) For tax years commencing after June 30, 2011, but prior to July 1, 2016:

(i) Low-emitting vehicles: twenty-five per cent;

(ii) Ultra-low-emitting vehicles or inherently low-emitting vehicles: fifty per cent; and

(iii) Zero-emitting vehicles, seventy-five per cent; and

(C) For tax years commencing after June 30, 2016, but prior to July 1, 2019:

(i) Low-emitting vehicles: zero per cent;

(ii) Ultra-low-emitting vehicles or inherently low-emitting vehicles: twenty-five per cent; and

(iii) Zero-emitting vehicles, fifty per cent.

(2) For a motor vehicle purchase or power source replacement that permanently displaces a motor vehicle or power source that is ten years old or older, the percentage specified in paragraph (1) that may be claimed pursuant to this subsection shall be multiplied by two, but in no event shall the percentage exceed one hundred per cent. For the purposes of this paragraph, "permanently displaces a motor vehicle or power source" means the vehicle or power source being replaced by the alternative fuel vehicle or power source will no longer be operated upon the highways of this State.

(f) The certification levels set forth in subsection (e) shall have the same meanings as set forth in the regulations promulgated by the United States Environmental Protection Agency in 40 CFR part 88 governing clean fuel vehicles.

(g) A near zero-emitting vehicle shall be treated as a zero-emitting vehicle for all purposes under this section.

(h) For a motor vehicle that was not used solely and exclusively for business purposes during the tax year for which a credit is claimed, the amount of the credit allowed pursuant to this section shall be prorated in proportion to the percentage of time during the tax year that the motor vehicle was used for business purposes.

(i) No more than one tax credit shall be granted pursuant to subsection (e) for any individual motor vehicle.

(j) For income tax years commencing after December 31, 2002, but prior to July 1, 2016, a motor vehicle, conversion, or power source certified to the low-emitting vehicle emissions standard that is purchased by a person shall be eligible for a credit pursuant to this section.

(k) The credit allowed under this section shall be claimed against the net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.

(l) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of 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.

(m) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect retroactive to taxable years beginning after December 31, 2002.

 

 

INTRODUCED BY:

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