STAND. COM. REP. NO. 2213

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 2157

       S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

 

Sir:

 

     Your Committees on Public Safety, Intergovernmental, and Military Affairs and Housing, to which was referred S.B. No. 2157 entitled:

 

"A BILL FOR AN ACT RELATING TO AUTOMATIC FIRE SUPPRESSION SYSTEMS,"

 

beg leave to report as follows:

 

     The purpose and intent of this measure is to establish a temporary refundable income tax credit of twenty-five percent of the total costs, including installation costs, of an automatic fire suppression system in any new detached one- or two-family dwelling unit in a structure used only for residential purposes.

 

     Your Committees received testimony in support of this measure from the State Fire Council, Hawaii State Association of Counties, General Contractors Association of Hawaii, Oahu County Committee on Legislative Priorities of the Democratic Party of Hawaii, and Kauai County Councilmember Derek S.K. Kawakami.  Your Committees received comments on this measure from the Department of Taxation, Building Industry Association Hawaii, and Tax Foundation of Hawaii.

 

     Your Committees find that enhanced fire safety measures in residential homes are needed to effectively protect citizens and their property from devastating losses.  The vast majority of one- and two-family residences in the State lack automatic fire suppression, or sprinkler, systems.  Your Committees find that the primary reason for the lack of home fire sprinkler systems is cost.  Therefore, your Committees find that it is important to provide incentives to homeowners to promote more widespread installation of automatic fire suppression systems.  Further, your Committees find that an individual income tax credit is an effective method for incentivizing the adoption of this residential fire safety measure.

 

     However, your Committees have concerns about restricting the proposed tax credit to one- or two-family dwelling units.  Your Committees find that the proposed tax credit should apply more broadly to all new residential units.  Your Committees also recommend that if your Committee on Ways and Means decides to hear this measure, your Committee on Ways and Means should investigate the appropriateness of broadening the proposed tax credit.

 

     In addition, your Committees agree with the suggestion presented in testimony by the Tax Foundation of Hawaii that the proposed tax credit be non-refundable.

 

     Accordingly, your Committees have amended this measure by:

 

     (1)  Amending language to make all new detached dwelling units used only for residential purposes eligible for the proposed tax credit;

 

     (2)  Changing the proposed tax credit to a non-refundable tax credit;

 

     (3)  Changing the taxable year upon which the proposed credit shall apply to taxable years beginning after December 31, 2050, to encourage further discussion; and

 

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

 

     As affirmed by the records of votes of the members of your Committees on Public Safety, Intergovernmental, and Military Affairs and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2157, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2157, S.D. 1, and be referred to your Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committees on Public Safety, Intergovernmental, and Military Affairs and Housing,

 

________________________________

WILL ESPERO, Chair

 

________________________________

CLARENCE K. NISHIHARA, Chair