REPORT TITLE:
County Excise and Use Tax


DESCRIPTION:
Repeals time and designated use restrictions on county general
excise and use tax surcharge to authorize counties to enact
ordinances for county general excise and use tax at their
discretion at a rate of 1/2%.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            125         
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT
RELATING TO COUNTY TAXES.



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

 1      SECTION 1.  Section 46-16.7, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§46-16.7  County general excise and use tax [surcharge].
 
 4 (a)  Each county, except the county of Kalawao, may establish a
 
 5 general excise and use tax [surcharge] of one-half per cent.
 
 6 Each county shall establish the general excise and use tax
 
 7 [surcharge] by ordinance [adopted before October 1, 1992, which
 
 8 shall take effect on January 1, 1993, and remain in effect for
 
 9 ten years through December 31, 2002, unless earlier repealed,
 
10 pursuant to subsection (c)].  No ordinance shall be adopted until
 
11 the county has conducted a public hearing on the proposed
 
12 ordinance.  Notice of the public hearing shall be published in a
 
13 newspaper of general circulation within the county at least twice
 
14 within a period of thirty days immediately preceding the date of
 
15 the hearing.  [If a county fails to adopt a county general excise
 
16 and use tax surcharge ordinance by October 1, 1992, the county
 
17 shall not be covered by this section.]
 
18      (b)  Each county shall notify the director of taxation
 
19 within ten days after the county has adopted a general excise and
 

 
Page 2                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 use tax [surcharge] ordinance, and the director of taxation shall
 
 2 levy, assess, collect, and otherwise administer the general
 
 3 excise and use tax [surcharge] for the next taxable year
 
 4 beginning January 1, [1993,] and for taxable years thereafter
 
 5 [through December 31, 2002,] as provided by chapters 237 and 238.
 
 6      (c)  The general excise and use tax [surcharges] received
 
 7 from the State by each county shall be used [as follows:
 
 8      (1)  The city and county of Honolulu shall use the
 
 9           surcharges to develop a fixed rail rapid transit
 
10           system.  All private source revenues generated or
 
11           pledged to develop a fixed rail rapid transit system
 
12           that are received prior to the operation of the system
 
13           shall be used as county matching funds for moneys
 
14           requested from the transit capital development fund,
 
15           pursuant to chapter 51D, before surcharges may be used.
 
16           The director of finance shall determine whether or not
 
17           private sources are adequate to meet county matching
 
18           requirements.  The director of finance shall submit a
 
19           report of the findings to the legislature.  Upon
 
20           legislative acceptance of the findings, within sixty
 
21           days of the first regular legislative session convened
 
22           following the submittal of the findings, no additional
 

 
 
 
Page 3                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1           moneys may be expended from the transit fund; provided
 
 2           that:
 
 3           (A)  Such limitation on the expenditure of moneys from
 
 4                the transit fund shall not occur prior to
 
 5                December 31, 1992; and
 
 6           (B)  Private source revenues received prior to the
 
 7                operation of the system or received in each year
 
 8                that the surcharge is in effect shall be committed
 
 9                to the funding of the capital costs of the fixed
 
10                rail rapid transit system prior to any
 
11                determination regarding the duration of the
 
12                surcharge.
 
13      (2)  All surcharges collected by the State for the city and
 
14           county of Honolulu but not used for the purpose of
 
15           developing a fixed rail rapid transit system shall be
 
16           deposited into the state treasury to be returned to the
 
17           taxpayers who resided in the city and county of
 
18           Honolulu for more than two hundred days of the taxable
 
19           year in the aggregate during the time that the
 
20           surcharges were collected, in the form of an income tax
 
21           credit, the amount of the credit to be determined by
 
22           law.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (3)  The general excise and use tax surcharge shall be
 
 2           repealed upon the determination by the director of
 
 3           finance that all authorized capital costs of the fixed
 
 4           rail rapid transit system or county projects under
 
 5           paragraph (4) have been collected and distributed
 
 6           pursuant to chapter 248.
 
 7      (4)  The counties of Hawaii, Kauai, and Maui shall use the
 
 8           surcharges for public transportation systems, including
 
 9           mass transportation, sewage, or water development, and
 
10           parks, including park operation, maintenance,
 
11           infrastructure, or purchase.
 
12      (d)  As used in this section:
 
13      "Capital costs" means nonrecurring costs required to
 
14 construct a transit facility or system, including debt service,
 
15 costs of land acquisition and development, acquiring of rights-
 
16 of-way, planning, design, and construction, including equipping
 
17 and furnishing the facility or system.
 
18      "Private source revenue" means all funds, concessions,
 
19 development rights, or those assets of value contractually agreed
 
20 upon with the county from sources other than state, county, or
 
21 federal governments as a result of, or for the purposes of,
 
22 developing mass transportation.] as each respective county
 

 
 
 
Page 5                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 authorizes by ordinance."
 
 2      SECTION 2.  Section 235-110.7, Hawaii Revised Statutes, is
 
 3 amended as follows:
 
 4      1.  By amending subsections (a) and (b) to read:
 
 5      "(a)  There shall be allowed to each taxpayer subject to the
 
 6 tax imposed by this chapter a capital goods excise tax credit
 
 7 which shall be deductible from the taxpayer's net income tax
 
 8 liability, if any, imposed by this chapter for the taxable year
 
 9 in which the credit is properly claimed.
 
10      The amount of the tax credit shall be determined by the
 
11 application of the following rates against the cost of the
 
12 eligible depreciable tangible personal property used by the
 
13 taxpayer in a trade or business and placed in service within
 
14 Hawaii after December 31, 1987.  For calendar years beginning
 
15 after:  December 31, 1987, the applicable rate shall be three per
 
16 cent; December 31, 1988, and thereafter, the applicable rate
 
17 shall be four per cent, except that [for the period January 1,
 
18 1993, through December 31, 2002, and] for eligible depreciable
 
19 tangible personal property used in a trade or business that is
 
20 purchased in a county in which the county general excise and use
 
21 tax [surcharge] is in effect and placed in service in any county
 
22 the applicable rate shall be four and one-half per cent.  For
 

 
 
 
Page 6                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 taxpayers with fiscal taxable years, the applicable rate shall be
 
 2 the rate for the calendar year in which the eligible depreciable
 
 3 tangible personal property used in the trade or business is
 
 4 placed in service within Hawaii.
 
 5      In the case of a partnership, S corporation, estate, or
 
 6 trust, the tax credit allowable is for eligible depreciable
 
 7 tangible personal property which is placed in service by the
 
 8 entity.  The cost upon which the tax credit is computed shall be
 
 9 determined at the entity level.  Distribution and share of credit
 
10 shall be determined by rules.
 
11      In the case of eligible depreciable tangible personal
 
12 property for which a credit for sales or use taxes paid to
 
13 another state is allowable under section 238-3(i), the amount of
 
14 the tax credit allowed under this section shall not exceed the
 
15 amount of use tax[,] and [for the period January 1, 1993, through
 
16 December 31, 2002,] the amount of the county general excise and
 
17 use tax [surcharge], if any, actually paid under chapter 238
 
18 relating to such tangible personal property.
 
19      If a deduction is taken under section 179 (with respect to
 
20 election to expense certain depreciable business assets) of the
 
21 Internal Revenue Code of 1954, as amended, no tax credit shall be
 
22 allowed for that portion of the cost of property for which the
 

 
 
 
Page 7                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 deduction was taken.
 
 2      (b)  If the tax credit is claimed by a taxpayer at the rate
 
 3 of four and one-half per cent, and the tangible personal property
 
 4 is purchased in a county in which the county general excise and
 
 5 use tax [surcharge] is not in effect, there shall be added to and
 
 6 become part of the tax liability of the taxpayer:
 
 7      (1)  The amount of the tax credit claimed under this section
 
 8           multiplied by three; or
 
 9      (2)  Ten per cent of the income tax liability for the
 
10           taxable year for which the income tax return is being
 
11           filed,
 
12 whichever is greater.
 
13      If the capital goods excise tax credit allowed under
 
14 subsection (a) exceeds the taxpayer's net income tax liability,
 
15 the excess of credit over liability shall be refunded to the
 
16 taxpayer; provided that no refunds or payment on account of the
 
17 tax credit allowed by this section shall be made for amounts less
 
18 than $1.
 
19      All claims for tax credits under this section, including any
 
20 amended claims, must be filed on or before the end of the twelfth
 
21 month following the close of the taxable year for which the
 
22 credits may be claimed.  Failure to comply with the foregoing
 

 
 
 
Page 8                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 provision shall constitute a waiver of the right to claim the
 
 2 credit."
 
 3      2.  By amending subsection (e) to read:
 
 4      "(e)  As used in this section, the definition of section 38
 
 5 property (with respect to investment in depreciable tangible
 
 6 personal property) as defined by section 48(a)(1)(A), (a)(1)(B),
 
 7 (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l),
 
 8 (m), and (s) of the Internal Revenue Code of 1954, as amended as
 
 9 of December 31, 1984, is operative for the purposes of this
 
10 section only.
 
11      As used in this section:
 
12      "Cost" means (1) the actual invoice price of the tangible
 
13 personal property, or (2) the basis from which depreciation is
 
14 taken under section 167 (with respect to depreciation) or from
 
15 which a deduction may be taken under section 168 (with respect to
 
16 accelerated cost recovery system) of the Internal Revenue Code of
 
17 1954, as amended, whichever is less.
 
18      "Eligible depreciable tangible personal property" is section
 
19 38 property as defined by the operative provisions of section 48
 
20 and having a depreciable life under section 167 or for which a
 
21 deduction may be taken under section 168 of the federal Internal
 
22 Revenue Code of 1954, as amended.
 

 
 
 
Page 9                                         125         
                                     H.B. NO.           
                                                        
                                                        

 
 1      "Placed in service" means the earliest of the following
 
 2 taxable years:
 
 3      (1)  The taxable year in which, under the:
 
 4           (A)  Taxpayer's depreciation practice, the period for
 
 5                depreciation; or
 
 6           (B)  Accelerated cost recovery system, a claim for
 
 7                recovery allowances;
 
 8           with respect to such property begins; or
 
 9      (2)  The taxable year in which the property is placed in a
 
10           condition or state of readiness and availability for a
 
11           specifically assigned function.
 
12      "Purchase" means an acquisition of property.
 
13      "Tangible personal property" means tangible personal
 
14 property which is placed in service within Hawaii after
 
15 December 31, 1987, and the purchase or importation of which
 
16 resulted in a transaction which was subject to the imposition and
 
17 payment of tax at the rate of four per cent, except that [for the
 
18 period January 1, 1993, through December 31, 2002, and] if the
 
19 county general excise and use tax [surcharge] is in effect, the
 
20 tax rate shall be four and one-half per cent, under chapter 237
 
21 or 238.  "Tangible personal property" does not include tangible
 
22 personal property which is an integral part of a building or
 

 
 
 
Page 10                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 structure or tangible personal property used in a foreign trade
 
 2 zone, as defined under chapter 212."
 
 3      SECTION 3.  Section 237-8.5, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "§237-8.5  County general excise and use tax [surcharge];
 
 6 administration.  (a)  The county general excise and use tax
 
 7 [surcharge], upon the adoption of county ordinances under section
 
 8 46-16.7, shall be levied, assessed, and collected as provided in
 
 9 this section on all gross proceeds and gross income taxable under
 
10 this chapter at the four per cent tax rate in such manner that
 
11 the combined state general excise tax and the county general
 
12 excise and use tax [surcharge tax] shall be four and one-half per
 
13 cent in those counties adopting the [surcharge.] tax.  All
 
14 provisions of this chapter shall apply to the county general
 
15 excise and use tax [surcharge]; and with respect to the
 
16 [surcharge,] tax, the director shall have all the rights and
 
17 powers provided under this chapter.  In addition, the director of
 
18 taxation shall have the exclusive rights and power to determine
 
19 the county or counties in which a person is engaged in business
 
20 and, in the case of a person engaged in business in more than one
 
21 county, the director shall determine through apportionment or
 
22 other means, that portion of the general excise and use tax
 

 
 
 
Page 11                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 [surcharge] attributable to business conducted in each county.
 
 2      (b)  Each county general excise and use tax [surcharge]
 
 3 adopted pursuant to section 46-16.7(a) shall be levied as of
 
 4 January 1, [1993,] of the next taxable year following the
 
 5 enactment of the ordinance and shall continue [for a period of
 
 6 ten years through December 31, 2002, or] until [earlier]
 
 7 repealed.
 
 8      (c)  The county general excise and use tax [surcharge] shall
 
 9 be imposed on the gross proceeds or gross income of all written
 
10 contracts that require the passing on of the taxes imposed under
 
11 this chapter; provided that if the gross proceeds or gross income
 
12 are received as payments after December 31, [1992,] of the year
 
13 preceding the first year of imposition of the county general
 
14 excise and use tax on contracts entered into before [June 19,
 
15 1990,] the effective date of the ordinance and the written
 
16 contracts do not provide for the passing on of increased rates of
 
17 taxes, the county general excise and use tax [surcharge] shall
 
18 not be imposed on the gross proceeds or gross income covered
 
19 under the written contracts.  The county general excise and use
 
20 tax [surcharge] shall be imposed on the gross proceeds or gross
 
21 income from all contracts entered into on or after [June 19,
 
22 1990,] the effective date of the ordinance whether or not the
 

 
 
 
Page 12                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 contract allows for the passing on of any tax or any tax
 
 2 increases.
 
 3      (d)  No county general excise and use tax [surcharge] shall
 
 4 be established on any:
 
 5      (1)  Gross income or gross proceeds taxable under this
 
 6           chapter at the one-half per cent tax rate;
 
 7      (2)  Gross income or gross proceeds taxable under this
 
 8           chapter at the 0.15 per cent tax rate; or
 
 9      (3)  Transactions, amounts, persons, gross income, or gross
 
10           proceeds exempt from tax under this chapter.
 
11      (e)  The director of taxation shall revise the general
 
12 excise tax forms to provide for the clear and separate
 
13 designation of the imposition and payment of the county general
 
14 excise and use tax [surcharge].
 
15      The taxpayer shall designate the taxation district to which
 
16 the county general excise and use tax [surcharge] is assigned in
 
17 accordance with rules adopted by the director of taxation under
 
18 chapter 91.  The taxpayer shall file a schedule with the
 
19 taxpayer's periodic and annual general excise and use tax returns
 
20 summarizing the amount of taxes assigned to each taxation
 
21 district.
 
22      The penalties provided by section 231-39 for failure to file
 

 
 
 
Page 13                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 a tax return shall be imposed on the amount of [surcharge] county
 
 2 general excise and use tax due on the return being filed for the
 
 3 failure to file the schedule required to accompany the return.
 
 4 In addition, there shall be added to the tax an amount equal to
 
 5 ten per cent of the amount of the [surcharge] county general
 
 6 excise and use tax and the state tax due on the return being
 
 7 filed for the failure to file the schedule or the failure to
 
 8 correctly report the assignment of the county general excise and
 
 9 use tax and general excise tax by taxation district on the
 
10 schedule required under this subsection.
 
11      (f)  All taxpayers who file on a fiscal year basis [whose
 
12 fiscal year ends after December 31, 1992, or after December 31,
 
13 2002,] shall file a short period annual return for the period
 
14 preceding January 1, [1993, or preceding January 1, 2003.  Each
 
15 fiscal year taxpayer shall also file a short period annual return
 
16 for the period starting after December 31, 1992, and ending
 
17 before January 1, 1994, and for the period starting after
 
18 December 31, 2002, and ending before January 1, 2004.
 
19      All monthly, annual, and amended returns due under this
 
20 chapter for any period preceding January 1, 2003, which are
 
21 submitted to the department after December 31, 2002, shall
 
22 include in payments submitted with the return any county general
 

 
 
 
Page 14                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 excise and use tax surcharge that may be due for the period
 
 2 preceding January 1, 2003.] of the first year the county excise
 
 3 and use tax is imposed."
 
 4      SECTION 4.  Section 238-2.5, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "§238-2.5  County general excise and use tax [surcharge];
 
 7 administration.(a)  The county general excise and use tax
 
 8 [surcharge], upon the adoption of a county ordinance under
 
 9 section 46-16.7, shall be levied, assessed, and collected as
 
10 provided in this section on the value of property taxable under
 
11 this chapter at the four per cent tax rate under section 238-2(3)
 
12 in a manner that the combined state use tax and the county
 
13 general excise and use tax [surcharge] shall be four and one-half
 
14 per cent in those counties adopting the [surcharge.] county
 
15 general excise and use tax.  All provisions of this chapter shall
 
16 apply to the county general excise and use tax [surcharge].  With
 
17 respect to the [surcharge,] county general excise and use tax,
 
18 the director shall have all the rights and powers provided under
 
19 this chapter.  In addition, the director of taxation shall have
 
20 the exclusive rights and power to determine the county or
 
21 counties in which a person imports or purchases tangible personal
 
22 property and, in the case of a person importing or purchasing
 

 
 
 
Page 15                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 tangible property in more than one county, the director shall
 
 2 determine through apportionment or other means, that portion of
 
 3 the county general excise and use tax [surcharge] attributable to
 
 4 the importation or purchase in each county.
 
 5      (b)  Each county general excise and use tax [surcharge]
 
 6 shall be levied as of January 1, [1993,] of the first taxable
 
 7 year after the effective date of the ordinance and shall continue
 
 8 [for a period of ten years through December 31, 2002, or] until
 
 9 [earlier] repealed.
 
10      (c)  No county general excise and use tax [surcharge] shall
 
11 be established upon any use taxable under this chapter at the
 
12 one-half per cent tax rate or upon any use that is not subject to
 
13 taxation or that is exempt from taxation under this chapter.
 
14      (d)  The director of taxation shall revise the use tax forms
 
15 to provide for the clear and separate designation of the
 
16 imposition and payment of the county general excise and use tax
 
17 [surcharge].
 
18      The taxpayer shall designate the taxation district to which
 
19 the county general excise and use tax [surcharge] is assigned in
 
20 accordance with rules adopted by the director of taxation under
 
21 chapter 91.  The taxpayer shall file a schedule with the
 
22 taxpayer's periodic and annual general excise and use tax returns
 

 
 
 
Page 16                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 summarizing the amount of taxes assigned to each taxation
 
 2 district.
 
 3      The penalties provided by section 231-39 for failure to file
 
 4 a tax return shall be imposed on the amount of [surcharge] county
 
 5 general excise and use tax due on the return being filed for the
 
 6 failure to file the schedule required to accompany the return.
 
 7 In addition, there shall be added to the tax an amount equal to
 
 8 ten per cent of the amount of the [surcharge] county general
 
 9 excise and use tax and state tax due on the return being filed
 
10 for the failure to file the schedule or the failure to correctly
 
11 report the assignment of the use tax by taxation district on the
 
12 schedule required under this subsection.
 
13      (e)  All taxpayers who file on a fiscal year basis [whose
 
14 fiscal year ends after December 31, 1992, or after December 31,
 
15 2002,] shall file a short period annual return for the period
 
16 preceding January 1, [1993, or preceding January 1, 2003.  Each
 
17 fiscal year taxpayer shall also file a short period annual return
 
18 for the period starting after December 31, 1992, and ending
 
19 before January 1, 1994, and for the period starting after
 
20 December 31, 2002, and ending before January 1, 2004.
 
21      All monthly, annual, and amended returns due under this
 
22 chapter for any period preceding January 1, 2003, which are
 

 
 
 
Page 17                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 submitted to the department after December 31, 2002, shall
 
 2 include in payments submitted with the return any county general
 
 3 excise and use tax surcharge that may be due for the period
 
 4 preceding January 1, 2003.] of the first year the county general
 
 5 excise and use tax is imposed."
 
 6      SECTION 5.  Section 248-2.5, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "[[]§248-2.5[]]  County general excise and use tax
 
 9 [surcharge]; disposition of proceeds.(a)  All county general
 
10 excise and use [tax surcharges] taxes collected by the director
 
11 of taxation shall be paid into the state treasury each month
 
12 within ten working days after collection, and shall be kept by
 
13 the state director of finance in special accounts.  Out of the
 
14 county general excise and use [tax surcharges] taxes paid into
 
15 the state treasury special accounts, the state director of
 
16 finance shall retain, from time to time, sufficient amounts to
 
17 reimburse the State for the costs of assessment, collection, and
 
18 disposition of the county general excise and use tax [surcharge]
 
19 incurred by the State.  Amounts retained shall be general fund
 
20 realizations of the State.
 
21      (b)  The costs of assessment, collection, and disposition of
 
22 county general excise and use [tax surcharges] taxes shall be
 

 
 
 
Page 18                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 withheld from payment to the several counties by the State out of
 
 2 the county general excise and use [tax surcharges] taxes
 
 3 collected for the current calendar year.
 
 4      The costs of assessment, collection, and disposition of the
 
 5 county general excise and use [tax surcharges] taxes shall be
 
 6 borne by each of the several counties in an amount proportional
 
 7 to the total amount of [surcharges] county general excise and use
 
 8 taxes allocated to that county divided by the total amount of
 
 9 [surcharges] county general excise and use taxes collected for
 
10 the entire State for the preceding calendar year.
 
11      For the purpose of this section, the costs of assessment,
 
12 collection, and disposition of the county general excise and use
 
13 [tax surcharges] taxes shall include any and all costs, direct or
 
14 indirect, which are deemed necessary and proper to effectively
 
15 administer this section and sections 237-8.5 and 238-2.5.  Costs
 
16 include refunds or reductions of income taxes under section
 
17 235-110.7 attributable to the county general excise and use tax
 
18 [surcharge].
 
19      (c)  After the deduction of the costs under subsection (b),
 
20 the state director of finance shall pay the remaining balance on
 
21 a monthly or quarterly basis to the director of finance for each
 
22 county which has adopted a county general excise and use tax
 

 
 
 
Page 19                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 [surcharge] under section 46-16.7.  The payments shall be made as
 
 2 soon as possible after the county general excise and use [tax
 
 3 surcharges] taxes have been paid into the state treasury special
 
 4 accounts, or after the disposition of any tax appeal, as the case
 
 5 may be.  All county general excise and use [tax surcharges] taxes
 
 6 collected shall be distributed by the state director of finance
 
 7 to the county in which the county general excise tax [surcharge]
 
 8 is generated and shall be a general fund realization of the
 
 9 county [to be used for the purposes specified in section 46-16.7
 
10 by each of the several counties]."
 
11      SECTION 6.  Section 235-16, Hawaii Revised Statutes, is
 
12 repealed.
 
13      ["§235-16  County surcharge excise tax credit.  (a)  If the
 
14 collection of the county general excise and use tax surcharge
 
15 starts on January 1, 1993, as provided in sections 46-16.7,
 
16 237-8.5, and 238-2.5, then for taxable years, in each year that
 
17 the surcharge is in effect, beginning after December 31, 1992,
 
18 and ending before January 1, 2003, each resident individual
 
19 taxpayer, who files an individual income tax return for a taxable
 
20 year, and who is not claimed or is not otherwise eligible to be
 
21 claimed as a dependent by another taxpayer for federal or Hawaii
 
22 state individual income tax purposes, may claim a county
 

 
 
 
Page 20                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 surcharge excise tax credit in the amount computed under this
 
 2 section against the resident taxpayer's individual income tax
 
 3 liability for the taxable year for which the individual income
 
 4 tax return is being filed; provided that a resident individual
 
 5 who has no income or no income taxable under this chapter and who
 
 6 is not claimed or is not otherwise eligible to be claimed as a
 
 7 dependent by a taxpayer for federal or Hawaii state individual
 
 8 income tax purposes may claim this credit.
 
 9      (1)  Each resident individual taxpayer who resides for more
 
10           than two hundred days of the taxable year in the
 
11           aggregate in a county in which the county general
 
12           excise and use tax surcharge is in effect may claim the
 
13           tax credit according to the adjusted gross income
 
14           bracket shown in the following schedule:
 
15                        TAX CREDIT SCHEDULE
 
16           Adjusted Gross Income             Tax Credit
 
17           Under $5,000                         $ 25
 
18           $5,000 under $10,000                   45
 
19           $10,000 under $15,000                  65
 
20           $15,000 under $20,000                  90
 
21           $20,000 under $30,000                 110
 
22           $30,000 under $40,000                 125
 

 
 
 
Page 21                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1           $40,000 under $50,000                 145
 
 2           $50,000 under $75,000                 185
 
 3           $75,000 under $100,000                205
 
 4           $100,000 and over                     210
 
 5      (2)  Each resident individual taxpayer who resides for more
 
 6           than two hundred days of the taxable year in the
 
 7           aggregate in a county which has not adopted the county
 
 8           general excise and use tax surcharge may claim a tax
 
 9           credit according to the adjusted gross income bracket
 
10           shown in the schedule below:
 
11                        TAX CREDIT SCHEDULE
 
12           Adjusted Gross Income             Tax Credit
 
13           Under $5,000                         $  5
 
14           $5,000 under $10,000                   10
 
15           $10,000 under $20,000                  15
 
16           $20,000 under $30,000                  20
 
17           $30,000 under $40,000                  25
 
18           $40,000 under $50,000                  30
 
19           $50,000 under $75,000                  35
 
20           $75,000 and over                       40
 
21      A husband and wife filing separate returns for a taxable
 
22 year for which a joint return could have been filed by them shall
 

 
 
 
Page 22                                        125         
                                     H.B. NO.           
                                                        
                                                        

 
 1 claim only the tax credit to which they would have been entitled
 
 2 had a joint return been filed.
 
 3      (b)  The tax credit under this section shall not be
 
 4 available to (1) any person who has been convicted of a felony
 
 5 and who has been committed to prison and has been physically
 
 6 confined for the full taxable year; (2) any person who would
 
 7 otherwise be eligible to be claimed as a dependent but who has
 
 8 been committed to a youth correctional facility and has resided
 
 9 at the facility for the full taxable year; or (3) any
 
10 misdemeanant who has been committed to jail and has been
 
11 physically confined for the full taxable year.
 
12      (c)  The tax credits claimed by a resident taxpayer pursuant
 
13 to this section shall be deductible from the resident taxpayer's
 
14 individual income tax liability, if any, for the tax year in
 
15 which they are properly claimed.  If the tax credits claimed by a
 
16 resident taxpayer exceed the amount of income tax payment due
 
17 from the resident taxpayer, the excess of credits over payments
 
18 due shall be refunded to the resident taxpayer; provided that tax
 
19 credits properly claimed by a resident individual who has no
 
20 income tax liability shall be paid to the resident individual.
 
21      (d)  If the tax credit is claimed by an individual who does
 
22 not reside in the appropriate county as set forth in subsection
 

 
 
 
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 1 (a)(1) or (a)(2), there shall be added to and become a part of
 
 2 the tax liability of the individual:
 
 3      (1)  The amount of the tax credit claimed under this section
 
 4           multiplied by three; or
 
 5      (2)  Ten per cent of the income tax liability for the
 
 6           taxable year for which the individual income tax return
 
 7           is being filed,
 
 8 whichever is greater.
 
 9      All claims for tax credits under this section, including any
 
10 amended claims, must be filed on or before the end of the twelfth
 
11 month following the close of the taxable year for which the
 
12 credits may be claimed.  Failure to comply with the foregoing
 
13 provision shall constitute a waiver of the right to claim the
 
14 credit."]
 
15      SECTION 7.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.
 
17      SECTION 8.  This Act shall take effect upon its approval;
 
18 provided that:
 
19      (1)  Sections 3 and 4 of this Act shall take effect on
 
20           July 1, 1999; and
 
21      (2)  Sections 2 and 6 of this Act shall apply to taxable
 
22           years beginning after December 31, 1998.
 
23 
 
24                           INTRODUCED BY:  _______________________