STAND. COM. REP. NO. 750

Honolulu, Hawaii

RE:    S.B. No. 148

       S.D. 2

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 148, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INCOME TAX CREDIT,"

begs leave to report as follows:

     The purpose of this measure is to satisfy the Hawaii State constitutional mandate requiring taxpayers to receive a tax credit or refund when the balance of the state general fund exceeds five per cent of general revenues for each of two successive fiscal years.

     The measure accomplishes this purpose by providing a tax credit for each resident individual taxpayer, who files an individual income tax return for the taxable year 2007, and who is not claimed or is not eligible to be claimed as a dependent by another.

     Your Committee received written comments in support of this measure from the Department of Taxation.  The Tax Foundation of Hawaii submitted written comments on this measure.

     Your Committee finds that providing a tax credit, as opposed to a refund, is the most efficient mechanism for satisfying the mandate of article VII, section 6 of the Constitution of the State of Hawaii.

     Your Committee amended this measure by making technical, nonsubstantive changes for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 148, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 148, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

ROSALYN H. BAKER, Chair