STAND. COM. REP. NO. 2459

Honolulu, Hawaii

RE:    S.B. No. 2578

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 2578 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a refundable state ohana residential housing income tax credit for qualified buyers of new homes that is similar to the federal income tax credit.

     Specifically, this state income tax credit is limited to qualified taxpayers who purchase a qualified principal residence on or after April 1, 2010, and before January 1, 2012.  The amount of the tax credit is the lesser of $6,000 or two per cent of the purchase price of the qualified principal residence, payable in two equal installments over the immediately following two taxable years.

     Your Committee received written comments in opposition to this measure from the Department of Taxation.  Written comments may be reviewed on the Legislature's website.

Your Committee finds that this measure will stimulate the demand side of new home purchasing in the State by providing financial incentives to homebuyers.  This is especially important as the federal tax incentive will soon expire.  The state residential housing income tax credit will provide a significant boost to a recovery from the current economic crisis faced by the construction industry and the overall state economy by stimulating spending, creating new construction jobs, and increasing the supply of affordable housing in Hawaii.

     Upon further consideration, your Committee has amended this measure by:

(1)  Changing the dollar amount of the tax credit to an unspecified amount;

(2)  Changing the percentage of the new home purchase price that is available as a tax credit to an unspecified percentage;

(3)  Changing the name of the tax credit to the "Hawaii residential housing income tax credit" to avoid confusion as to the purpose of the tax credit;

(4)  Changing the effective date to July 1, 2050, to promote further discussion; and

(5)  Making technical nonsubstantive amendments for the purposes of accuracy, clarity, 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. 2578, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2578, S.D. 1.

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

____________________________

DONNA MERCADO KIM, Chair