Report Title:

Food Tax Credit

Description:

Establishes a food tax credit to be claimed against a resident taxpayer's income tax liability for the amount of $           multiplied by the number of qualified exemptions to which the taxpayer is entitled.

HOUSE OF REPRESENTATIVES	H.B. NO.	1657
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that proposals to exempt transactions from the general excise tax should be weighed carefully.  In general, exemption of transactions primarily affecting consumers is undesirable.  The state tax review commission cautions against approving proposals to exempt health care services, food, apparel, or shelter, for example.  The tax review commission suggests that if the legislature finds it desirable to grant a tax relief on equity grounds, that it should pursue those goals either through low-income tax credits against income taxes or through the appropriation and expenditure process, which enhances transparency and accountability.

     The purpose of this Act is to establish a food income tax credit.

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

"§235-   Food tax credit. (a)  Each resident individual taxpayer, who files an individual income tax return for a taxable year, and who is not claimed of is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, may claim a food tax credit against the resident taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed; provided that a resident individual who has no income or no income taxable under this chapter and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for federal or Hawaii state individual income tax purposes may claim this credit.

(b)  Each resident individual taxpayer may claim a tax credit in the amount of $           multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided that no additional tax credit shall be claimed because of age.  A husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them may each claim $           under this subsection.

(c)  For the purposes of this section, a qualified exemption shall include exemptions permitted under this chapter; provided that a person for whom an exemption is claimed has physically resided in the State for more than nine months during the taxable year; and provided further that multiple exemptions shall not be granted because of deficiencies in vision or hearing, or other disability.  For purposes of claiming the credit only, a minor child receiving support from the department of human services of the State, social security survivor's benefits, and the like, may be considered a dependent and a qualified exemption of the parent or guardian.

(d)  The tax credit under this section shall not be available to:

(1) Any person who has been convicted of a felony and who has been committed to prison and has been physically confined for the full taxable year;

(2) Any person who would otherwise be eligible to be claimed as a dependent but who has been committed to a youth correctional facility and has resided at the facility for the full taxable year; or

(3) Any misdemeanant who has been committed to jail and has been physically confined for the full taxable year.

(e)  The tax credit claimed by a resident taxpayer pursuant to this section shall be deductible from the resident taxpayer's individual income tax liability, if any, for the tax year in which they are properly claimed.  If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of credit over payment due shall be refunded to the resident taxpayer; provided that the tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refund or payment on account of the tax credit allowed by this section shall be made for an amount less than $1.

(f)  All claims for tax credits under this section, including any amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2006.

INTRODUCED BY:

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