STAND. COM. REP. NO. 2047

Honolulu, Hawaii

RE: S.B. No. 3031

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 Agriculture and Environment, to which was referred S.B. No. 3031 entitled:

"A BILL FOR AN ACT RELATING TO THE ORGANIC FOODS PRODUCTION TAX CREDIT,"

begs leave to report as follows:

The purpose and intent of this measure is to clarify and strengthen the organic foods production tax credit.

Your Committee received testimony in support of this measure from the Department of Agriculture, Hawai‘i Farm Bureau, and Hawaii Farmers Union United. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the Legislature passed Act 258, Session Laws of Hawaii 2016, codified as section 235-110.94, Hawaii Revised Statutes, which established the organic foods production tax credit for farmers, ranchers, and producers seeking to obtain organic certification as an effort to reduce the burden on emerging small farmers seeking costly, but necessary, certifications and inspections promoting the production of locally grown food. The federal Organic Foods Production Act also provides exemptions for certain small farmers of organic products to reduce their operation costs. This measure further assists small farmers by clarifying and strengthening the organic foods production tax credit.

Your Committee has amended this measure by:

(1) Inserting language to specify the determination of pro rata basis for allocation of the tax credit;

(2) Repealing language that allowed the Board of Agriculture to assess and collect a fee to offset the costs of certifying tax credit claims; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3031, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3031, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,

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MIKE GABBARD, Chair