Report Title:

Landing Fees; Tax Credit

Description:

Provides a tax credit for landing fees for airlines; Authorizes the waiving of landing fees, joint use charge fees, and exclusive use terminal fees for a thirty-day period; authorizes the deferment of landing fees, joint use charge fees, and exclusive use terminal fees for two subsequent thirty-day periods. (SB1172 HD1)

THE SENATE

S.B. NO.

1172

TWENTY-SECOND LEGISLATURE, 2003

S.D. 2

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

relating to airlines.

 

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

PART I

SECTION 1. Currently, only two major commercial airlines have Honolulu-based fleets. Because of the high costs of maintaining such an operation in Hawaii, many commercial airlines have been forced to close fleets in Hawaii as a quick money-saving alternative.

The legislature recognizes that airline crews based in Hawaii have provided economic opportunities to our local businesses. The legislature believes that providing a tax credit to commercial airlines will encourage Honolulu-based fleets to stay in Hawaii and encourage other airlines to start-up Honolulu-based fleets. The legislature further believes that this in turn will bolster the state's economy.

The purpose of this Act is to assist commercial airlines by providing a tax credit on landing fees.

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

"§235- Airport landing fees tax credit. (a) Each principal operator of a commercial airline who files an individual or corporate net income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual or corporate net income tax.

(b) The tax credit shall be        per cent of the landing fees imposed under section 261-7.5 and paid by the principal operator during the taxable year.

(c) The tax credit claimed under this section by the principal operator shall be deductible from the principal operator's individual or corporate income tax liability, if any, for the tax year in which the credit is properly claimed.

(d) If the tax credit claimed by the principal operator under this section exceeds the taxpayer's liability in the tax year the credit is taken, the excess of credit over payments due may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that the tax credit properly claimed by a principal operator who has no income tax liability shall be paid to the principal operator; and provided further no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(e) 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.

(f) All 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.

(g) Claims for the tax credit under this section, including any amended claims thereof, 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 properly and timely claim the credit shall constitute a waiver of the right to claim the credit.

(h) This section shall apply to taxable years beginning after December 31, 2002, but not to taxable years beginning after December 31, 2005.

(i) As used in this section:

"Principal operator" means any individual or corporate taxpayer who derives at least fifty-one per cent of the taxpayer's gross annual income from commercial airlines operations."

SECTION 3. (a) The department of taxation shall submit a yearly report to the legislature no later than twenty days before the beginning of each regular session beginning with the 2004 session and ending with the        regular session. The report shall contain:

(1) The name and business address of every taxpayer that claimed the airport landing fees tax credit in the previous year;

(2) The amount of tax credits each taxpayer claimed in the previous year;

(3) The cost to the State of these tax credits for the previous year; and

(4) The sum of each of these for all the years since the tax credit became available.

(b) The report shall also include:

(1) An analysis of the economic impact of this tax credit on the State and the businesses that are eligible for the tax credit; and

(2) Recommendations for amending the availability or caps on the credit, if warranted.

The department of taxation shall work with the department of business, economic development, and tourism on this analysis.

PART II

SECTION 4. The political, economic, and security uncertainties caused by the anticipated armed conflict with Iraq rise with each passing day. The painstaking efforts of United Nations weapons inspectors have revealed a serious lack of compliance by the government of Iraq with Security Council resolutions that call for disarmament and for the destruction of materials used to build weapons of mass destruction. As a result, the U.S. administration has increasingly been preparing for an armed conflict or a war.

Furthermore, on February 7, 2003, the federal government raised the domestic terror alert from "high" to "elevated" because of a concern about a high risk of attacks by the al-Qaeda terrorist network against U.S. targets at home and abroad. U.S. intelligence and health officials have stated in public announcements and private briefings that they are particularly concerned about chemical, biological, or radiological weapons, including "dirty bombs" that would spread radioactive debris over a wide area.

The impact of the uncertainty and the preparations for war have had, are having, and will continue to have an adverse effect on the economy and people of Hawaii. Although the State has enjoyed some success in economic diversification, tourism remains a crucial pillar of the economy.

Should our nation go to war with Iraq, a look back at history can provide valuable insight on the potential effects such a war may have on the State's economy. For example, the Persian Gulf War of 1991 drastically reduced the demand for air travel, with leisure destinations, such as Hawaii, hardest hit. Combined with a reduction in visitors, a significant spike in fuel prices also occurred, thus inflicting further damage on the already weakened economy.

Moreover, neither our nation nor our state has fully recovered from the impact of the terrorist attacks of September 11, 2001. While Hawaii's economy is slowly improving, our recovery has been gradual and fragile and can easily be derailed by another terrorist attack or by a war.

The purpose of this part is to shield Hawaii's tourist industry and economy from the initial impact of an armed conflict or a war, by authorizing the director of transportation to:

(1) Waive the airport:

(A) Landing fees;

(B) Joint use charge fees; and

(C) Exclusive use terminal rental fees

by qualifying carriers for a thirty-day period;

and

(2) Defer payment of airport landing fees, joint use charge fees, and exclusive use terminal rental fees for qualifying carriers for two subsequent thirty-day periods.

SECTION 5. As used in this part:

"Air carrier" means any entity that undertakes to provide or holds itself out to the general public as engaging directly or indirectly in the transportation of passengers by air for compensation or hire within the State, between points within the State, or between the State and overseas destinations.

"Director" means the director of transportation.

"Fees" means the airport landing fee, joint use charge fee, or the exclusive use terminal rental fee, as the context requires, payable by the air carrier to the department of transportation.

"In-bound passenger load" means the number of passengers of an air carrier whose flight originates outside of or within the State, and who disembark from the flight at a location within the State.

"Program" means the airport landing fee, joint use charge fee, or exclusive use terminal rental fee waiver and deferral program, as the context requires, for qualifying air carriers.

"Qualifying air carrier" means an air carrier whose monthly in-bound passenger load for the applicable thirty-day waiver or deferral period equals or is not less than ninety per cent of the air carrier's in-bound passenger load for the month of January 2003.

SECTION 6. (a) Notwithstanding any other law to the contrary, including chapter 261, Hawaii Revised Statutes, the director may establish emergency programs. The program shall:

(1) Be limited to a program period of ninety consecutive days following the declaration of an emergency by the director that exists because of a substantial decrease in in-bound passengers due to an armed conflict or war; and

(2) Entitle each qualifying air carrier to:

(A) A waiver of the fees for the first thirty consecutive days of the ninety-day program period;

(B) A deferral of the fees for the first thirty-day period following the thirty-day waiver period of the program; and

(C) A deferral of the fees for the second thirty-day period following the first thirty-day deferral period of the program.

(b) In establishing the program, the director:

(1) Shall prepare any necessary program application forms;

(2) Shall provide, to the extent possible, advance notice of the details of the program to all potentially qualifying air carriers; and

(3) May establish, implement, and enforce rules without regard to chapter 91 for no longer than necessary to effectuate the purposes of this Act, in the event there is insufficient time for the director to adopt rules pursuant to chapter 91 because of the events justifying the declaration of an emergency by the director under this Act.

SECTION 7. The department of transportation shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2004, identifying the air carriers that qualify under the program, setting forth program costs, and including other relevant information related to the waiver or deferral of fees under the program.

SECTION 8. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval, provided that sections 2 and 3 shall apply to taxable years beginning after December 31, 2002; and provided further that sections 5, 6, and 7 shall be repealed on June 30, 2005.