Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Education and Military Affairs and Labor, to which was referred H.B. No. 172, H.D. 2, entitled:

beg leave to report as follows:

The purpose of this measure is to establish an income tax credit for employment of national guard members for taxpayers that pay or incur salary or wage costs for qualified employees who are active members of the Hawaii National Guard.

The Department of Defense, Hawaii Committee for Employer Support of the Guard and Reserve, Hawaii National Guard Enlisted Association, the Chamber of Commerce of Hawaii, and an individual submitted testimony in support of the measure. Comments were submitted by the Department of Taxation and Tax Foundation of Hawaii.

Your Committees find that this measure provides an incentive to employers of national guard personnel to continue their compensation while deployed fighting the nation's war on terrorism. With guards and reservists being called away to active duty for prolonged periods, employers face extreme hardships when their employees are activated for duty. A tax credit is an appropriate tool to provide employers with relief for supporting their employees called to duty.

Upon further consideration, your Committees have amended this measure by inserting the preferred language from S.B. 1837, S.D. 1 which makes the following amendments:

As affirmed by the records of votes of the members of your Committees on Education and Military Affairs and Labor that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 172, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 172, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.