REPORT TITLE:
Tax Credit, Ethanol


DESCRIPTION:
Provides a tax credit for the production of ethanol.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2221
THE SENATE                              S.B. NO.           S.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 byproducts and municipal
 
 3 solid wastes or other low or no value products.  This offers an
 
 4 opportunity in Hawaii to establish businesses that can utilize
 
 5 indigenous feedstocks to produce ethanol while benefiting our
 
 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 a change in the performance or operating
 
10 reliability of gasoline powered vehicles.  Ethanol may also be
 
11 blended with diesel or waste cooking oils 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 non-agricultural 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.
 

 
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 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 into
 
 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 the private sector investments
 
11 required to develop this type of opportunity in Hawaii.  Job
 
12 creation, environmental public benefits, and economic
 
13 opportunities resulting from the granting of this incentive will
 
14 far outweigh the costs.  Therefore, the purpose of this Act is to
 
15 create an ethanol producers income tax credit to encourage
 
16 private sector investment in Hawaii based ethanol production
 
17 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
 

 
 
 
 
 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        


 1 shall be allowed to each taxpayer subject to the taxes imposed by
 
 2 this chapter, an income tax credit which shall be applied to the
 
 3 taxpayer's net income tax liability, if any, imposed by this
 
 4 chapter for the taxable year in which the credit is properly
 
 5 claimed.  The amount of the credit shall be 40 cents per gallon
 
 6 of qualifying ethanol production of fuel grade ethanol produced
 
 7 at a qualifying ethanol production facility.
 
 8      (b)  As used in this section:
 
 9      "Qualifying ethanol production" means ethanol produced from
 
10 renewable, organic feedstocks, or waste materials, including
 
11 municipal solid waste.  All qualifying production shall be
 
12 fermented, distilled, and dehydrated at the facility.
 
13      "Qualifying ethanol production facility" means a facility
 
14 located in the State which produces motor fuel grade ethanol
 
15 meeting the minimum specifications by the American Society of
 
16 Testing and Materials standard D-4806, as amended.
 
17      (c)  The credit allowed under this section shall be claimed
 
18 against the net income tax liability for the taxable year.  For
 
19 the purposes of this credit, the "net income tax liability" means
 
20 net income tax liability reduced by all other credits allowed
 
21 under this chapter.
 

 
 
 
 
 
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 1      (d)  If the tax credit under this section exceeds the
 
 2 taxpayer's income tax liability, the excess of credit over
 
 3 liability shall be refunded to the taxpayer; provided that no
 
 4 refunds or payments on account of the tax credit allowed by this
 
 5 section shall be made for amounts less than $1.  All claims for a
 
 6 tax credit under this section must be filed on or before the end
 
 7 of the twelfth month following the close of the taxable year for
 
 8 which the credit may be claimed.  Failure to comply with the
 
 9 foregoing provision shall constitute a waiver of the right to
 
10 claim the credit.
 
11      (e)  The director of taxation shall prepare such forms as
 
12 may be necessary to claim a credit under this section.  The
 
13 director may also require the taxpayer to furnish information to
 
14 ascertain the validity of the claim for credit made under this
 
15 section and may adopt rules necessary to effectuate the purposes
 
16 of this section pursuant to chapter 91."
 
17      SECTION 3.  New statutory material is underscored.
 
18      SECTION 4.  This Act shall take effect upon its approval and
 
19 shall apply to taxable years beginning after December 31, 2000.