STAND. COM. REP. NO. 949

 

Honolulu, Hawaii

 

RE: H.B. No. 961

H.D. 2

S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

 

Sir:

 

Your Committee on Agriculture and Environment, to which was referred H.B. No. 961, H.D. 2, entitled:

 

"A BILL FOR AN ACT RELATING TO FARMERS,"

 

begs leave to report as follows:

 

The purpose and intent of this measure is to exclude from the computation of taxable state income a certain amount of income earned by qualifying farmers from food or value-added food products grown or raised by a farmer and sold within the State, provided that the farmer's annual gross income does not exceed a specified amount.

 

Your Committee received testimony in support of this measure from the Department of Agriculture, Hawaii Crop Improvement Association, Maui Chamber of Commerce, Hawaii Farm Bureau, Counter Culture Farm, and one individual. Your Committee received comments on this measure from the Department of Taxation, Department of the Attorney General, Tax Foundation of Hawaii, and one individual.

 

Your Committee finds that the growth of small, diversified farming businesses adds to and diversifies Hawaii's economy. Your Committee finds that the creation of an exclusion from income tax for a certain amount of income earned from such businesses will encourage the growth of new, small, and diversified farming businesses, will not significantly affect tax collections by the State, and will improve the long-term economic well-being of the State.

 

Your Committee has amended this measure by:

 

(1) As recommended by the Department of Taxation:

 

(A) Expanding the income tax exemption to include farmers with the tax filing statuses of married filing separately and head of household; and

 

(B) Applying the income tax exemption to taxable years beginning after December 31, 2017;

 

(2) As recommended by the Department of the Attorney General, removing language that requires a "farmer" to sell the food or products within the State in order for the exemption to apply;

 

(3) Making it effective on July 1, 2017; and

 

(4) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

Your Committee recommends that if your Committee on Ways and Means chooses to pass this measure that it consider amendments to apply the income tax exemption to the first $5,000 of income earned by a farmer; provided that the farmer's annual gross income does not exceed $50,000 if filing a tax return as a single taxpayer and does not exceed $100,000 if filing a tax return as married filing jointly.

 

As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 961, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 961, H.D. 2, S.D. 1, and be referred to your Committee on Ways and Means.

 


Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,

 

 

 

________________________________

MIKE GABBARD, Chair