Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Agriculture and Water, Land, & Ocean Resources, to which was referred H.B. No. 1033 entitled:

beg leave to report as follows:

The purpose of this bill is to provide equitable treatment for farmers by establishing a refundable Farmers Irrigation Income Tax Credit that is equal to the difference between the amount paid by a farmer for water purchased from the county, and the amount that the farmer would have paid for water had the farmer had access to a state irrigation system.

The Hawaii Farm Bureau Federation, Maui County Farm Bureau, and Hawaii Agriculture Research Center supported this bill. The Department of Agriculture supported the intent of this measure. The Department of Taxation opposed this bill. The Tax Foundation of Hawaii offered comments.

Your Committees note that state irrigation systems, which provide water at substantially lower rates than the rates charged by the county boards of water supply, are not available to all farmers in the state. Allowing farmers who do not have access to the more affordable water to claim a tax credit addresses this disparity.

Your Committees also remain cognizant of the need to ensure that agricultural commodities are replenished, and that agricultural lands remain healthy and fertile. Incentives to support farmers should be viewed within a broader framework that promotes a viable, sustainable future for agriculture in Hawaii.

As affirmed by the records of votes of the members of your Committees on Agriculture and Water, Land, & Ocean Resources that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1033 and recommend that it pass Second Reading and be referred to the Committee on Finance.