S.B. NO.



S.D. 2
















SECTION 1. The legislature finds that Hawaii imports eighty-five per cent of its food and is considered highly vulnerable in issues of food security. Climate change significantly increases this vulnerability with sea level rise and intensified weather patterns in the Pacific, such as droughts, hurricanes, and floods. In 2016, at the International Union of Conservation of Nature World Conservation Congress, the governor pledged to double food production in Hawaii by 2030 as part of Hawaii's commitment to its residents and the world and in order to begin to address this import inequity.

The legislature further finds that small farms on ten acres or less in Hawaii produce a significant portion of locally-grown and locally-consumed food on each island. While the small farm sector of agriculture is growing, the 2017 census of agriculture reports that the average small-scale farmer in Hawaii makes less than $40,000 per year, with losses of almost $10,000 annually due to the high costs of farming, including land and water. To accomplish the State's 2030 goal for local food production, there is an urgent need to better support small farmers, including through small economic incentives to build a larger market.

The legislature additionally finds that the department of agriculture has identified staple starches as the greatest food security risk in the State. Taro is a hypoallergenic complex carbohydrate that plays a critical role in the health of the family, particularly Native Hawaiians. Yet, the cost of poi remains inaccessible to families most in need of this important staple starch food.

Taro is one of Hawaii's highest yielding staple starch food crops, producing ten thousand pounds and twenty thousand pounds per acre per annum under wet and dry cultivation, respectively. However, taro is severely underproduced in the State. The 2017 census of agriculture reported two hundred seven farms and four hundred ninety-five acres of taro in wetland and dryland production. An estimated two hundred to three hundred additional acres are unreported or in subsistence taro cultivation. Annual reported production averages four million tons. However, taro imports are estimated to soon exceed local production.

The legislature also finds that loi kalo, or wetland taro systems, are also recognized for their potential to mitigate other impacts of climate change by functioning as riparian buffers and sediment retention basins. Underground foods, such as taro, can often survive hurricane or flood events and be harvested to address immediate food shortages where the capacity to store and cook food can be retained.

The legislature further finds that, in its report to the 2010 legislature, the taro security and purity task force made several recommendations to make taro farming affordable, including improving access to land, water, mentoring, and economic incentives. The counties of Maui and Kauai have enacted ordinances that exempt kuleana lands in active taro production from county taxes. These ordinances provide limited relief to some taro farms but are not available in all counties and are insufficient for young farmers to offset the typically low incomes experienced by taro growers or mitigate the effects of competition from imports.

The legislature additionally finds that, in 1901, the first legislature of the Territory of Hawaii recognized the role that taro played in feeding the nation by passing Senate Bill No. 87 to encourage the cultivation of taro by exempting taro and the cultivation of taro from all state taxes. While Senate Bill No. 87 was never signed into law, its intentions were clear in encouraging the production of more taro.

The legislature also finds that, in recognition of the critical importance of protecting and perpetuating the traditional practice of taro farming as part of Hawaii's cultural identity and its role in local food security, there is a compelling interest in enacting a law that is similar to Senate Bill No. 87 in the present day.

Additionally, the legislature finds that an acreage and income cap is a more effective threshold than a timeframe for a tax benefit where one of the goals is to increase overall local taro production.

The purpose of this Act is to create stronger economic incentives for new taro farmers, improve the livelihoods of existing taro farmers, and reduce the cost of poi for local families by excluding up to $ of income derived from taro production from the state income tax.

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

"235- Taro cultivation and production; exclusion. (a) Except as provided in section 235-2.4 (relating to "unrelated business taxable income") and sections 235-61 to 235-67 (relating to withholding and collection of tax at source), the income of qualified taxpayers engaged in the business of taro cultivation and production of value‑added taro products shall not be taxable up to the first $ of gross income per qualified taxpayer; provided that this exclusion shall not apply if at any time during the year the total amount of land for locally grown taro in the State surpasses thirty thousand acres, as determined by the department of agriculture.

(b) As it relates to qualified taxpayers engaged in the business of taro cultivation and production of value-added taro products, the following shall not be taxable under this chapter:

(1) Taro plants; taro corm; leaf; and huli for taro farms or portions of farms dedicated to taro plants, taro corm, leaf, and huli;

(2) Taro lands planted with taro, including fallow rotation lands specifically for taro production of less than or equal acreage to lands in active taro production by each individual grower; and

(3) Preparations of taro, poi, and value-added products produced with taro.

(c) The department of taxation may consult with the office of Hawaiian affairs in the administration of the exclusion provided under this section.

(d) For the purposes of this section:

"Qualified taxpayer" means an individual engaged in:

(1) The production of taro or taro products for sale, or the use of land for taro farming; and

(2) The manufacturing, compounding, canning, preserving, milling, processing, refining, or preparing taro for sale.

"Taro corm" means the starchy underground portion of the taro plant. "Taro corm" is known as "kalo" in the Hawaiian language.

"Taro huli" means a taro top, as used for planting, where the upright stem is cut below the leaf and below the top of the corm of the taro, such that it includes a piece of the corm at its base where roots can emerge."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2020.



Report Title:

Taro; Income Tax; Exclusion



Establishes an exclusion from the state income tax for an unspecified portion of a person's income derived from the business of taro cultivation or production of taro products. Provides that the exclusion shall not apply if the department of agriculture determines that more than 30,000 acres of land is used for locally grown taro. Effective 7/1/2050. (SD2)




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