Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committees on Labor and Transportation, Military Affairs, and Government Operations, to which was referred S.B. No. 2367 entitled:

beg leave to report as follows:

The purpose of this measure is to establish a five per cent income tax credit for employers that hire members of the United States National Guard.

This measure also requires that the tax credit shall not exceed $1,000 per employee serving as a member of the National Guard.

Testimony in support of this measure was submitted by the Department of Defense and the Chamber of Commerce of Hawaii.

Testimony in opposition to this measure was submitted by the Department of Taxation and the Tax Foundation of Hawaii.

Your Committees find that individuals serving as members of the National Guard have been called upon more and more in recent years. Your Committees further find that increases in the number of military deployments have imposed undue hardships upon employers who employ members of the National Guard by causing them to experience a decrease in their workforce.

Your Committees determine that efforts must be made to assist these employers and to also ensure that they not become reluctant to continue to hire and employ members of our military forces. However, your Committees also determine that members of the Military Reserves have also been tasked increasingly over the past few years and their contributions and the accommodations provided by their nonmilitary employers should also be recognized.

Accordingly, your Committees have amended this measure by making the tax credit applicable with respect to employees who are members of the Reserves as well as the National Guard.

As affirmed by the records of votes of the members of your Committees on Labor and Transportation, Military Affairs, and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2367, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2367, S.D. 1, and be referred to the Committee on Ways and Means.