STAND. COM. REP. NO. 76

Honolulu, Hawaii

RE:    S.B. No. 1222

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred S.B. No. 1222 entitled:

"A BILL FOR AN ACT RELATING TO INCOME TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to encourage the use of renewable energy technology systems in the State.

     The measure attempts to accomplish this purpose by clarifying that tax credits are eligible to only in-state installations of renewable energy technology systems.

     Your Committee received comments on this measure from the Department of Taxation, Hawaii Renewable Energy Alliance, and the Tax Foundation of Hawaii.

     Your Committee received a fiscal impact statement from the Department of Taxation indicating that this measure, if passed, would result in a revenue gain to the State of $29,000.

     Your Committee finds that allowing renewable energy technology systems installed out-of-state to be eligible for tax credits defeats the purpose of offering tax credits.  Your Committee further finds that clarification is needed to ensure only renewable energy technology systems installed in the State of Hawaii are eligible for tax credits.

     Your Committee adopted the Department of Taxation's recommendations and amended this measure by re-inserting "resident" into section 235-129(a), Hawaii Revised Statutes, and by clarifying that all tax credits earned by an S corporation may be allocated to its shareholders.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1222, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1222, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

____________________________

RON MENOR, Chair