STAND. COM. REP. NO. 81

Honolulu, Hawaii

RE:    S.B. No. 808

       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 Intergovernmental and Military Affairs, to which was referred S.B. No. 808 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a five per cent income tax credit for Hawaii employers that hire State residents who are members of the Hawaii National Guard.  It also establishes that the maximum tax credit per Hawaii National Guard employee shall be $1,000.

     Testimony in support of this measure was submitted by the State of Hawaii Department of Defense, the Hawaii National Guard Association, the Hawaii National Guard Enlisted Association, the National Guard Association of Hawaii Insurance Trust, and the Chamber of Commerce of Hawaii.

     Comments were submitted by the Department of Taxation and the Tax Foundation of Hawaii.

     Your Committee finds that as our nation continues its war on terrorism, many of our citizen soldiers and airmen will be called to active military duty to deploy.  To this end, this measure provides an incentive for employers to hire and continue to employ members of the Hawaii National Guard.  It also serves as a key recruitment and retention incentive and, at the same time, demonstrates that the State of Hawaii truly cares and supports its National Guard.

     Your Committee further finds that the terms employer and taxpayer are used interchangeably throughout this measure.  In order to alleviate any confusion regarding these terms, your Committee has replaced the term, "employer" with "taxpayer."

     The Department of Taxation testified that, if this measure is enacted, the estimated revenue loss would be approximately $5,000,000 annually.  No methodology on how the amount was calculated was provided.

     As affirmed by the record of votes of the members of your Committee on Intergovernmental and Military Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 808, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 808, 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 Intergovernmental and Military Affairs,

____________________________

LORRAINE R. INOUYE, Chair