STAND. COM. REP. NO. 3280

Honolulu, Hawaii

RE:    H.B. No. 2626

       H.D. 2

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred H.B. No. 2626, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to promote manufacturing in the State by temporarily establishing a nonrefundable income tax credit for taxpayers who incur certain expenses for manufacturing products in Hawaii.

     Your Committee received written comments in support of this measure from the Department of Business, Economic Development, and Tourism, High Technology Development Corporation, The Chamber of Commerce of Hawaii, Hawaii Farm Bureau Federation, KYD, Inc., and Meadow Gold Dairies.  The Department of Taxation, Hawaii Strategic Development Corporation, and Tax Foundation of Hawaii submitted written comments on the measure.

     Your Committee finds that there is a need for Hawaii to develop and support its manufacturing industry.  This is evidenced by the fact that Hawaii imports over ninety per cent of the products consumed in the State each year.  Your Committee also finds that there is a great demand outside the State for products that are made in Hawaii.  Your Committee believes that this measure will assist in the development of manufacturing in Hawaii.

     Your Committee has amended this measure by:

     (1)  Requiring that a taxpayer who claims the tax credit, for purchasing equipment used to manufacture tangible personal property in the State, place the equipment into service within one year after the date of purchase;

     (2)  Clarifying that the tax credit may not be claimed for the purchase of equipment for which another taxpayer in the State has previously claimed the tax credit;

     (3)  Excluding, from the tax credit, costs related to electricity production;

     (4)  Appropriating funds to the Department of Business, Economic Development, and Tourism to administer the certification of claims for the tax credit; and

     (5)  Making technical nonsubstantive amendments for the purposes of consistency, 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 H.B. No. 2626, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2626, H.D. 2, S.D. 2.

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

____________________________

DAVID Y. IGE, Chair