HB1527 HD1.DOC

SECTION 1. Chapter 231, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§231- Evaluation of tax credits and tax exemptions; reporting requirements. (a) Commencing on July 1, 2018, and every five years thereafter, the department shall perform an evaluation of all newly enacted tax credits or tax exemptions in title 14 as follows:

(1) For the initial evaluation commencing on July 1, 2018, the department shall evaluate all tax credits or tax exemptions that have been enacted during and since the regular session of 2016; and

(2) For all subsequent evaluations, the department shall evaluate all newly enacted tax credits or tax exemptions taking effect during the five year period preceding the evaluation.

(b) The evaluation shall include:

(1) The intended objective of each tax credit or tax exemption;

(2) The economic effects of each tax credit or tax exemption;

(3) Whether the economic effects achieved by the tax credit or tax exemption, if any, meet the intended objective of the tax credit or tax exemption;

(4) The amount of credit taken or exemption granted by fiscal year on a cash basis; and

(5) Whether projections made on enactment of the tax credit or tax exemption were achieved.

(c) The department shall report to the legislature on the evaluation required by this section, including proposed legislation if appropriate, no later than twenty days prior to the convening of the regular session immediately following completion of each evaluation. The report shall provide information sufficient to allow the legislature to determine whether the tax credits and tax exemptions provided under title 14 are achieving their intended objectives, are consistent with public policies, and whether the credits and exemptions should be continued, modified, or repealed."

SECTION 2. (a) The department of taxation shall perform an evaluation of the tax credits or tax exemptions provided in title 14 and listed in section 3 of this Act. The evaluation shall include:

(1) The intended objective of each tax credit or tax exemption;

(2) The economic effects of each tax credit or tax exemption;

(3) Whether the economic effects achieved by the tax credit or tax exemption, if any, meet the intended objective of the tax credit or tax exemption;

(4) The amount of credit taken or exemption granted by fiscal year on a cash basis; and

(5) Whether projections made on enactment of the tax credit or tax exemption were achieved.

(b) The department of taxation shall report to the legislature on the evaluation required by this section no later than twenty days prior to the convening of the regular session of 2018.

(c) In evaluating the economic effects of the tax credits and tax exemptions provided in title 14 and listed in section 3 of this Act, the department of taxation may:

(1) Establish a technical advisory group, which may include the department of labor and industrial relations, department of agriculture, department of commerce and consumer affairs, department of transportation, department of human services, and department of business, economic development, and tourism, to help identify and develop the data elements needed for the analyses; and

(2) Collect, process, and analyze data from federal, state, and local government sources.

(d) The data and economic analyses provided by the department of taxation in its report to the legislature shall provide information sufficient to allow the legislature to determine whether the tax credits and tax exemptions provided under title 14 are achieving their intended objectives, are consistent with public policies, and whether the credits and exemptions should be continued, modified, or repealed.

(e) If the department of taxation recommends that a tax credit or tax exemption should be modified, it shall provide with its report to the legislature, and with the assistance from the departments listed in subsection (c)(1), proposed draft legislation recommending appropriate modifications.

SECTION 3. The department of taxation shall recommend to the legislature whether the following sections shall be repealed on December 31, 2019:

(1) Section 235-4.5, Hawaii Revised Statutes, (taxation of trusts, beneficiaries; credit);

(2) Section 235-9, Hawaii Revised Statutes, (exemptions; generally);

(3) Section 235-9.5, Hawaii Revised Statutes, (stock options from qualified high technology businesses excluded from taxation);

(4) Section 235-12.5, Hawaii Revised Statutes, (renewable energy technologies; income tax credit);

(5) Section 235-17, Hawaii Revised Statutes, (motion picture, digital media, and film production income tax credit);

(6) Section 235-18, Hawaii Revised Statutes, (deposit beverage container deposit exemption);

(7) Section 235-54, Hawaii Revised Statutes, (exemptions);

(8) Section 235-55, Hawaii Revised Statutes, (tax credits for resident taxpayers);

(9) Section 235-110.2, Hawaii Revised Statutes, (credit for school repair and maintenance);

(10) Section 235-110.3, Hawaii Revised Statutes, (ethanol facility tax credit);

(11) Section 235-110.51, Hawaii Revised Statutes, (technology infrastructure renovation tax credit);

(12) Section 235-110.6, Hawaii Revised Statutes, (fuel tax credit for commercial fishers);

(13) Section 235-110.7, Hawaii Revised Statutes, (capital goods excise tax credit);

(14) Section 235-110.93, Hawaii Revised Statutes, (important agricultural land qualified agricultural cost tax credit);

(15) Section 235-129, Hawaii Revised Statutes, (S corporations; tax credits);

(16) Section 237-16.8, Hawaii Revised Statutes, (general excise tax; exemption of certain convention, conference, and trade show fees);

(17) Section 237-23, Hawaii Revised Statutes, (general excise tax; exemptions, persons exempt, applications for exemption);

(18) Section 237-23.5, Hawaii Revised Statutes, (general excise tax; related entities; common paymaster; certain exempt transactions);

(19) Section 237-24, Hawaii Revised Statutes, (general excise tax; amounts not taxable);

(20) Section 237-24.3, Hawaii Revised Statutes, (general excise tax; additional amounts not taxable);

(21) Section 237-24.5, Hawaii Revised Statutes, (general excise tax; additional exemptions);

(22) Section 237-24.7, Hawaii Revised Statutes, (general excise tax; additional amounts not taxable);

(23) Section 237-24.75, Hawaii Revised Statutes, (general excise tax; additional exemptions);

(24) Section 237-24.9, Hawaii Revised Statutes, (general excise tax; aircraft service and maintenance facility);

(25) Section 237-25, Hawaii Revised Statutes, (general excise tax; exemptions of sales and gross proceeds of sales to federal government, and credit unions);

(26) Section 237-26, Hawaii Revised Statutes, (general excise tax; exemption of certain scientific contracts with the United States);

(27) Section 237-27, Hawaii Revised Statutes, (general excise tax; exemption of certain petroleum refiners);

(28) Section 237-27.5, Hawaii Revised Statutes, (general excise tax; air pollution control facility);

(29) Section 237-27.6, Hawaii Revised Statutes, (general excise tax; solid waste processing, disposal, and electric generating facility; certain amounts exempt);

(30) Section 237-28.1, Hawaii Revised Statutes, (general excise tax; exemption of certain shipbuilding and ship repair business);

(31) Section 237-29, Hawaii Revised Statutes, (general excise tax; exemptions for certified or approved housing projects);

(32) Section 237-29.5, Hawaii Revised Statutes, (general excise tax; exemption for sales of tangible personal property shipped out of the State);

(33) Section 237-29.53, Hawaii Revised Statutes, (general excise tax; exemption for contracting or services exported out of State);

(34) Section 237-29.55, Hawaii Revised Statutes, (general excise tax; exemption for sale of tangible personal property for resale at wholesale);

(35) Section 237-29.8, Hawaii Revised Statutes, (general excise tax; call centers; exemption; engaging in business; definitions);

(36) Section 239-5.5, Hawaii Revised Statutes, (public service company tax; surcharge amounts exempt);

(37) Section 239-6.5, Hawaii Revised Statutes, (public service company tax; tax credit for lifeline telephone service subsidy);

(38) Section 239-12, Hawaii Revised Statutes, (public service company tax; call centers; exemption; engaging in business; definitions);

(39) Section 241-4.5, Hawaii Revised Statutes, (banks and other financial corporations tax; capital goods excise tax credit);

(40) Section 241-4.6, Hawaii Revised Statutes, (banks and other financial corporations tax; renewable energy technologies; income tax credit);

(41) Section 241-4.7, Hawaii Revised Statutes, (banks and other financial corporations tax; low-income housing; income tax credit);

(42) Section 241-4.8, Hawaii Revised Statutes, (banks and other financial corporations tax; high technology business investment tax credit); and

(43) Section 244D-4.3, Hawaii Revised Statutes, (liquor tax; exemption for sales of liquor out of the State).

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2030.

HOUSE OF REPRESENTATIVES	H.B. NO.	1527
TWENTY-EIGHTH LEGISLATURE, 2016		H.D. 1
STATE OF HAWAII