STAND. COM. REP. NO. 1143-14
Honolulu, Hawaii
, 2014
RE: S.B. No. 3082
S.D. 2
Honorable Joseph M. Souki
Speaker, House of Representatives
Twenty-Seventh State Legislature
Regular Session of 2014
State of Hawaii
Sir:
Your Committee on Economic Development & Business, to which was referred S.B. No. 3082, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO TAXATION,"
begs leave to report as follows:
The purpose of this measure is to increase economic development in the State through promotion of manufacturing by establishing a temporary nonrefundable income tax credit for qualified manufacturing costs incurred for manufacturing products in Hawaii.
As one of the most isolated land masses on Earth, Hawaii must import approximately ninety percent of all products consumed annually. However, manufacturers in Hawaii produce goods that are in demand across the United States and around the world. Thus, developing and supporting manufacturing in Hawaii could serve two purposes. First, in-state manufacturing could reduce Hawaii's need to import consumer products. Second, Hawaii could export more products made in-state leading to greater economic development.
According to the Chamber of Commerce of Hawaii, Hawaii has over 1,000 active manufacturers employing approximately 17,000 workers and contributing to the economy by exporting manufactured goods. The Chamber of Commerce estimates that in 2012, nearly $570,000,000 in manufactured goods were exported from Hawaii. Providing a manufacturing tax credit would provide financial benefits to these manufacturers, thereby increasing their growth. The tax credit would also encourage other manufacturers to begin operations in Hawaii, thereby strengthening Hawaii's economy.
However, your Committee notes the staffing and funding concerns of the Department of Business, Economic Development, and Tourism to fulfill the obligation to certify the tax credits required under this measure and the concerns raised by the Department regarding the Department's access to, and authority to maintain, confidential taxpayer records. Your Committee respectfully requests the Committee on Finance to further review these concerns.
Your Committee also notes the questions raised by the Department of Taxation regarding specific eligibility and qualifying criteria for the tax credit, concerns that the same manufacturing tax credit for the purchase of machinery and equipment may be claimed by more than one taxpayer, and that manufacturers operating in the State's Enterprise Zone Program may use both the manufacturing tax credit provided for in this measure and the general excise tax credit under the Enterprise Zone Program. While your Committee requests the Committee on Finance to review these concerns, your Committee also requests the Committee on Finance to take into consideration the recommendations of the Chamber of Commerce that the manufacturing tax credit and the Enterprise Zone Program tax credit be allowed to co-exist.
As affirmed by the record of votes of the members of your Committee on Economic Development & Business that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3082, S.D. 2, and recommends that it pass Second Reading and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Economic Development & Business,
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____________________________ CLIFT TSUJI, Chair |
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