Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred H.B. No. 2614 entitled:

begs leave to report as follows:

The purpose of this bill is to establish a tax credit of four percent of the costs incurred before July 1, 2005, for commercial construction and remodeling.

Testimony in support of this measure was submitted by the Hawaii Business Roundtable, Chamber of Commerce of Hawaii, Visitor Industry Coalition, Waikiki Improvement Association, and the General Contractors Association of Hawaii. The Building Industry Association of Hawaii, a representative of Ko'olina Resorts, Hawaii Tourism Authority, and the Hawaii Activities and Tours Association supported the intent of this bill. The Department of Budget and Finance and the Department of Taxation opposed this bill. The Department of Business, Economic Development, and Tourism, and the Tax Foundation of Hawaii offered comments.

Your Committee recognizes that the term "commercial real property" is not defined and may be interpreted too broadly. In addition, this bill does not prevent a taxpayer from claiming other income tax credits for the same costs, potentially resulting in double tax benefits. Your Committee supports future legislative efforts that may address these concerns.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2614 and recommends that it pass Second Reading and be referred to the Committee on Finance.