STAND. COM. REP. NO. 960

 

Honolulu, Hawaii

, 2021

 

RE: H.B. No. 1314

H.D. 2

 

 

 

 

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

 

Sir:

 

Your Committee on Finance, to which was referred H.B. No. 1314, H.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

begs leave to report as follows:

 

The purpose of this measure is to:

 

(1) Authorize each county to levy a county surcharge on transient accommodations tax if the county satisfies certain real property tax requirements;

 

(2) Repeal the allocation of transient accommodations tax revenue to the counties and make conforming amendments;

 

(3) Establish a Residential Property Owner Tax Credit and a Residential Circuit Breaker Tax Credit; and

 

(4) Beginning with taxable years after December 31, 2021, gradually implement new individual income tax and corporation income tax brackets and rates in intervals.

 

Your Committee received testimony in opposition to this measure from the Department of Budget and Fiscal Services of the City and County of Honolulu, Department of Finance of the County of Kauai, one member of the Maui County Council, Hawaii Budget & Policy Center, Progressive Democrats of Hawaii, Maui Chamber of Commerce, Hawaii Association of REALTORS, Americans for Democratic Action, Kohala Coast Resort Association, Napili Kai Beach Resort, and numerous individuals. Your Committee received comments on this measure from the Department of Taxation, Department of the Attorney General, Hawaii Children's Action Network Speaks!, and Tax Foundation of Hawaii.

 

Your Committee has amended this measure by:

 

(1) Setting the increases in real property tax rates that can be adopted via a county ordinance at twenty percent, rather than specific dollar amounts;

 

(2) Requiring each county to remit to the Director of Finance the amounts received pursuant to any county increases in real property tax rates and allocating an unspecified dollar amount of the amounts received to each county;

 

(3) Clarifying that any county surcharge on transient accommodations tax shall be levied no later than the first calendar day of the seventh month after adopting an ordinance to increase real property tax rates;

 

(4) Beginning January 1, 2031, requiring certain taxpayers who reside in a county that established a surcharge on transient accommodations tax to file an individual information return;

 

(5) Establishing a Landlord Low-Income Tenant Tax Credit for certain taxpayers who reside in a county that established a surcharge on transient accommodations tax;

 

(6) Renaming the Residential Property Owner Tax Credit the Real Property Tax Credit;

 

(7) Clarifying that a qualified taxpayer for purposes of the Residential Circuit Breaker Tax Credit and Real Property Tax Credit is a person who is subject to the state income tax and resides in a county that established a surcharge on transient accommodations tax;

 

(8) Deleting the definition of "resident" for purposes of the Residential Circuit Breaker Tax Credit and Real Property Tax Credit;

 

(9) Setting the Real Property Tax Credit amount at fifty percent of the real property tax owed and paid by a qualified taxpayer;

 

(10) Implementing new income tax brackets and rates for taxpayers who reside in a county that established a surcharge on transient accommodations tax;

 

(11) Clarifying that the new corporation income tax rates apply to a corporation or regulated investment company that is located in a county that established a surcharge on transient accommodations tax;

 

(12) Deleting language that would have set the corporation income tax to $0 after December 31, 2030;

 

(13) Updating the preamble to reflect the amended purpose; and

 

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

 

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1314, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1314, H.D. 2.

 

 

Respectfully submitted on behalf of the members of the Committee on Finance,

 

 

 

 

____________________________

SYLVIA LUKE, Chair