Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development, to which was referred H.B. No. 1628, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to exclude from taxable gross income, the interest on educational loans paid by individuals who establish a new practice as a primary health care provider in underserved areas.

Testimony supporting this measure was received form the Hawaii Dental Association. Opposing testimony was received from the Department of Taxation. Comments on this measure were received from the Tax Foundation of Hawaii.

Your Committee finds that the primary health and medical needs of residents of Hawaii, Kauai, and Maui counties, the north shore of Oahu, Koolauloa, and the leeward coast of Oahu in Makaha, Waianae, Maili, and Nanakuli are largely underserved. This deficit in health care directly threatens the public health and welfare. One possible solution is to encourage primary health care providers, including physicians, optometrists, psychologists, and physical therapists, to open practices in these underserved areas. Your Committee finds that the tax incentive provided in this measure could stimulate the influx of health care providers to those areas.

Your Committee recognizes, however, that certain issues remain relating to the scope and applicability of this tax incentive. Therefore, your Committee has amended this measure by defecting its effective date to ensure continued discussion on its merits and provisions.

As affirmed by the record of votes of the members of your Committee on Economic Development that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1628, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1628, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.