STAND. COM. REP. NO. 395

Honolulu, Hawaii

RE: S.B. No. 1240

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1240 entitled:

"A BILL FOR AN ACT RELATING TO TAX CONFORMITY,"

begs leave to report as follows:

The purpose and intent of this measure is to require the State to conform to those provisions of the federal Consolidated Appropriations Act, 2021, relating to taxable income and deductible expenses.

Your Committee received testimony in support of this measure from Chamber of Commerce Hawaii; Hawaii Restaurant Association; Island Plastic Bags, Inc.; Hawaii Food Industry Association; Maui Chamber of Commerce; Hawaii Lodging and Tourism Association; Hawaii Association of Public Accountants; and one individual.

Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the federal Paycheck Protection Program helped tens of thousands of businesses in the State to shoulder the economic downturn caused by the coronavirus disease 2019 (COVID-19) pandemic. Your Committee further finds that this measure will provide much-needed tax relief to small businesses that continue to struggle in the current economic climate, by allowing businesses to deduct, from their Hawaii taxes, those payroll and other business expenses paid using Paycheck Protection Program loan proceeds.

Your Committee has amended this measure by:

(1) Correcting the name of the Consolidated Appropriations Act, 2021; and

(2) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

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 S.B. No. 1240, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1240, S.D. 1, and be placed on the calendar for Third Reading.

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

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DONOVAN M. DELA CRUZ, Chair