STAND. COM. REP. NO. 2189

Honolulu, Hawaii

RE: S.B. No. 2856

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 2856 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Amend the low-income household renters income tax credit to broaden its application to move taxpayers and to increase the amount of the credit for certain qualified taxpayers; and

(2) Use the consumer price index to adjust the amount of tax credit that may be claimed by a taxpayer.

Your Committee received testimony in support of this measure from the Hawaii Appleseed Center for Law & Economic Justice, Americans for Democratic Action Hawai‘i, Hawai‘i Alliance for Community-Based Economic Development, Hawaiian Community Assets, Planned Parenthood Votes Northwest and Hawaii, Catholic Charities Hawai‘i, Parents and Children Together, YWCA O‘ahu, Hawaii Children's Action Network, Women's Caucus of the Democratic Party of Hawai‘i, and thirteen individuals. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the income tax credit for low-income household renters was established forty years ago to help make up for the high rents and tax rates that burden low-income and moderate-income earners. However, this income tax credit has not been routinely updated to account for inflation. In light of the fact that Hawaii has the highest homeless rate per capita and some of the highest cost burdens of any state in the nation, this measure contributes to a comprehensive strategy to meet the State's affordable housing goals.

Your Committee has amended this measure by adopting the language suggested by the Department of Taxation that:

(1) Amends the definition of "adjusted gross income" to mean the same as defined by the Internal Revenue Code, rather than section 235-1, Hawaii Revised Statutes;

(2) Amends the index to which the term "consumer price index" refers and changes the reference from the United States Department of Labor to the United States Bureau of Labor Statistics as the consumer price index publishing source under the definition of "consumer price index"; and

(3) Amends the method for adjusting the amount of the tax credit that may be claimed by the taxpayer based on the consumer price index.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2856, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2856, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Housing,

________________________________

WILL ESPERO, Chair