Specifies a five-year plan for education. Establishes an income tax credit, capped at $15,000,000 per year in the aggregate, for computer purchases by households with school children that earn no more than 50% of the median family income.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the quality of education remains one of the most important topics of concern among our residents. Providing our children with the best possible education is the most effective means we have toward ensuring a prosperous and healthy future for our communities. Recognizing this point, the legislature has addressed this issue with measures such as Act 51, Session Laws of Hawaii 2004 (Act 51), sometimes referred to as the Reinventing Education Act, which was designed to overhaul and streamline the education system in Hawaii. Among other things, Act 51:

The legislature further finds that additional work needs to be done to continue the momentum generated by Act 51's reforms. To achieve this, the legislature believes that a comprehensive five-year plan should be implemented that drives the State's commitment to education to another level. In addition to other programs, the five-year plan for education should consist of the following primary components:

The five-year plan would dedicate sufficient financial resources for each of these initiatives. With the economy experiencing a spectacular revival, and with the resultant influx of tax revenue, the financial environment is now conducive to a comprehensive approach to resolve the issues that continue to plague our education system. It is imperative that the State take full advantage of this window of opportunity.

The purpose of this Act is to ensure access to technology by providing a tax credit for computer purchases by low-income households with children in school.

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

"§235- Access to technology tax credit. (a) There shall be allowed to each qualified taxpayer an income tax credit that 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 tax credit shall be equal to the cost of purchasing computers or computer-related equipment incurred by each qualified taxpayer up to a maximum amount not to exceed $500 for each qualified taxpayer. The tax credit shall apply to computers or computer-related equipment purchased after December 31, 2005, and before January 1, 2011.

(b) If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the computer and computer-related costs for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the qualified taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(c) If the tax credit under this section exceeds the qualified taxpayer's income tax liability, the excess of credit over liability shall be refunded to the qualified taxpayer; provided that no refunds or payments shall be made for amounts less than $1. All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director shall also require the qualified 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) To qualify for the income tax credit, the qualified taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(f) The department of education shall provide the department of taxation with student and other relevant information to the extent that is necessary to comply with this section. The department of taxation shall request student and other relevant information to the extent that is necessary to comply with this section from all other schools outside of the department of education. If insufficient information is provided to the department of taxation to verify a taxpayer's eligibility and qualifications in claiming the tax credit, the tax credit shall not be awarded to the taxpayer.

(g) No later than March 31 of each year following the year in which computer or computer-related equipment costs were incurred, each qualified taxpayer claiming the tax credit shall submit a written, notarized statement to the director of taxation identifying the computer or computer-related equipment costs incurred in the year being claimed.

(h) The department of taxation, with the assistance of the department of education, shall maintain records of the names of qualified taxpayers eligible for the credit and the total amount of eligible costs incurred in each taxable year by each qualified taxpayer. The department of taxation, with the assistance of the department of education, shall compile all eligible costs and, upon each determination, shall issue a certificate to each qualified taxpayer pursuant to subsection (i) indicating:

(i) The department of taxation shall certify no more than $15,000,000 in tax credits in the aggregate for all taxpayers for each taxable year; provided that if the total amount claimed on all statements in the aggregate filed by March 31 for the previous tax year amounts to:

(j) As used in this section:

"Computers or computer-related equipment" means computers, monitors, keyboards, printers, scanners, copiers, mouses, and trackballs; provided that computer package deals or bundles shall also qualify even if such package deals or bundles contain items not specified in this definition.

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified taxpayer" means a taxpayer who:

(1) Purchases the computer or computer-related equipment;

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2005.