STAND

STAND. COM. REP. NO.662-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2574

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 2574 entitled:

"A BILL FOR AN ACT RELATING TO AN EXTENSION OF THE RESIDENTIAL CONSTRUCTION AND REMODELING INCOME TAX CREDIT,"

begs leave to report as follows:

The purpose of this bill is to stimulate economic activity in the residential construction industry by:

(1) Extending the residential construction and remodeling income tax credit to include costs incurred up to December 31, 2005; and

(2) Applying the credit to costs incurred on or after October 1, 2001, to target the credit for the period after the September 11, 2001, terrorist attacks.

In addition, this bill clarifies:

(1) The definition of "construction or remodeling cost"; and

(2) The original credit provisions to give the Department of Taxation (DOTAX) clearer guidance on the administration of the credit.

DOTAX, the Department of Business, Economic Development, and Tourism, Land Use Research Foundation of Hawaii, General Contractors Association of Hawaii, Hawaii Association of Realtors, and AIA Hawaii State Council submitted testimony in support of this measure. Subcontractors Association of Hawaii supported the intent of this measure. The Building Industry Association of Hawaii and Armstrong Builders, Ltd., supported this measure, with amendments.

The Sierra Club, Hawaii Chapter, opposed this measure. The Tax Foundation of Hawaii submitted comments.

Your Committee has amended this bill by:

(1) Clarifying the definition of "construction and remodeling cost" to further strengthen the statute and provide fair and equitable administration of the credit by DOTAX; and

(2) Making technical, nonsubstantive amendments for purposes of clarity 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. 2574, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2574, H.D. 1.

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

		____________________________ DWIGHT Y. TAKAMINE, Chair