Offers incentives to expand the market for recyclables.

A BILL FOR AN ACT

SECTION 1. The purpose of this Act is to create additional incentives to expand the market for recyclables. The legislature recognizes that although the issue of landfills resides at the county level, in reality, it is an issue for everybody. Everybody will pay increased fees or taxes as a result of new landfill creation. Those that live in communities where landfills are present suffer because of their expansion. Diversion must become a viable option in order to manage the state's limited resources and limit the impact of landfills on our environment. The use of incentives is one method that has met with success in other jurisdictions.

In 2003, the legislature passed, and the Governor signed into law, Act 52. While this Act primarily reformed the procurement code, one section of this Act repealed a section of the code which prohibited the combining of certain bid preferences, including the preference for recycled products and products made in Hawaii. This essentially allows what House Bill 355 from the 2003 Session desired, allowing bidders who use recycled products made in Hawaii to combine preferences in bidding. The purpose of this Act is to continue the impetus towards greater use of recycled products in state construction projects through incentives.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Recyclable products tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter and chapter 237, an income tax credit, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

The amount of the credit shall be four per cent of the gross sales of:

(1) post-consumer recovered material; or

(2) recovered material; or

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

(c) If the tax credit under this section exceeds the tax

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(e) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2003.

(f) As used in this section:

"Post-consumer recovered material" means any product used by a consumer, including a business that purchases the material, that has served its intended end use, and that has been separated or diverted from the solid waste stream for the purpose of use, reuse, or recycling.

"Recycled content" means the percentage of a product composed of recovered material, or post-consumer recovered material, or both.

"Recovered material" means material that has been separated, diverted, or removed from the solid waste stream after a manufacturing process for the purpose of use, reuse, or recycling. This term does not include those materials that are generated and normally reused on-site for manufacturing processes (such as mill broke, in the case of paper products).

"Recycled product" means a product containing recovered material, or post-consumer recovered material, or both.

"Solid waste stream" means discarded material moving from the point of discard to ultimate disposition."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2005, and shall apply to taxable years after December 31, 2005.