REPORT TITLE:
Income Tax Credit, Ethanol


DESCRIPTION:
Provides an income tax credit for the production of fuel grade
ethanol produced at a qualifying ethanol production facility
located in Hawaii.  (HB2204 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2204
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO ETHANOL.



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

 1      SECTION 1.  The legislature finds that ethanol can be
 
 2 produced from agricultural crops or its byproducts, municipal
 
 3 solid wastes, or other low or no value products.  This offers
 
 4 opportunities in Hawaii to establish businesses that can use
 
 5 indigenous feedstocks to produce ethanol, while benefiting the
 
 6 economy and environment and helping to decrease Hawaii's
 
 7 dependence on imported petroleum.
 
 8      Ethanol can be mixed with gasoline up to a ten per cent
 
 9 blend without changing the performance or operating reliability
 
10 of gasoline powered vehicles.  Ethanol may also be blended with
 
11 diesel or waste cooking oils that are produced from crops to
 
12 produce biodiesel as a replacement for diesel fuel.
 
13      As sugar producers in Hawaii face declining market prices
 
14 and Hawaii's agriculture land base deteriorates irreversibly to
 
15 nonagricultural uses, the integration of ethanol production with
 
16 the sugar industry can result in economic improvements that will
 
17 contribute to the long-term stability and sustainability of that
 
18 industry.
 

 
Page 2                                                     2204
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      Further, in addition to traditional methods of producing
 
 2 ethanol from molasses and sugar products, newly-developed
 
 3 technology can also convert bagasse' crop residues, newspaper,
 
 4 municipal solid waste, and other underutilized materials to
 
 5 ethanol.  As the cost of locating new landfills rises and
 
 6 pollution is of greater concern, the conversion of these wastes
 
 7 to ethanol can help reduce waste disposal problems.
 
 8      The legislature finds that the development of new
 
 9 infrastructure to maximize ethanol opportunities can be costly.
 
10 Incentives are needed to stimulate private sector investments
 
11 required to develop this type of opportunity in Hawaii.  Job
 
12 creation, environmental public benefits, and economic
 
13 opportunities that result from the granting of this incentive
 
14 will far outweigh the costs.
 
15      The purpose of this Act is to provide an income tax credit
 
16 to encourage private sector investment in Hawaii-based ethanol
 
17 production facilities.
 
18      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 
19 by adding a new section to be appropriately designated and to
 
20 read as follows:
 
21      "§235-     Ethanol producer income tax credit.  (a)  There
 
22 shall be allowed to each taxpayer subject to the taxes imposed by
 
23 this chapter, an income tax credit that shall be applied to the
 
24 taxpayer's net income tax liability, if any, imposed by this
 

 
Page 3                                                     2204
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 chapter for the taxable year in which the credit is properly
 
 2 claimed.  The amount of the credit shall be forty cents per
 
 3 gallon of qualifying ethanol production of fuel grade ethanol
 
 4 produced at a qualifying ethanol production facility.
 
 5      (b)  The credit allowed under this section shall be claimed
 
 6 against the net income tax liability for the taxable year.  For
 
 7 the purposes of this credit, the "net income tax liability" means
 
 8 net income tax liability reduced by all other credits allowed
 
 9 under this chapter.
 
10      (c)  All claims for a tax credit under this section shall be
 
11 filed on or before the end of the twelfth month following the
 
12 close of the taxable year for which the credit may be claimed.
 
13 Failure to comply with the foregoing provision shall constitute a
 
14 waiver of the right to claim the credit.
 
15      (d)  The director of taxation shall prepare forms as may be
 
16 necessary to claim a credit under this section.  The director may
 
17 also require the taxpayer to furnish information to ascertain the
 
18 validity of the claim for credit made under this section.
 
19      (e)  As used in this section:
 
20      "Qualifying ethanol production" means ethanol produced from
 
21 renewable, organic feedstocks, or waste materials, including
 
22 municipal solid waste.  All qualifying production shall be
 
23 fermented, distilled, and dehydrated at the facility."
 

 
Page 4                                                     2204
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 3.  New statutory material is underscored.
 
 2      SECTION 4.  This Act shall take effect upon its approval and
 
 3 shall be repealed on June 30, 2010; provided that this Act shall
 
 4 apply to taxable years beginning after December 31, 2000.