STAND. COM. REP. NO.1165

Honolulu, Hawaii

, 2003

RE: H.B. No. 1394

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development, to which was referred H.B. No. 1394, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION TO STIMULATE THE ECONOMY,"

begs leave to report as follows:

The purpose of this measure is to establish a tax credit for a percentage of the qualified construction project costs incurred after June 30, 2003, and before January 1, 2006.

Testimony supporting this measure was received from the Waikiki Neighborhood Board No. 9, Chamber of Commerce of Hawaii, Hawaii Business Roundtable, Hawaii Construction Industry Association, Waikiki Improvement Association, Pacific Resource Partnership, Retail Merchants of Hawaii, Hawaii Hotel Association, Hyatt Regency Waikiki Resort & Spa, Outrigger Hotels & Resorts, Land Use Research Foundation of Hawaii, AIA Hawaii State Council, American Institute of Architects, Hawaii State Council, Marc Resorts Hawaii, Waikiki Beach Activities, Ltd., HawaiiFun.org Inc., Cendant Corporation/Fairfield Resorts, and one indiivdual.

The Department of Taxation opposed this measure citing possible adverse impacts on the State Budget. Comments were received from the Tax Foundation of Hawaii.

Your Committee finds that the State is enduring challenging economic times. Local, national, and international political and other events have created economic uncertainty throughout the world. Hawaii is particularly vulnerable due to its deep reliance on the travel and tourism industries. Your Committee finds that encouraging redevelopment of the State's assets and infrastructure may be part of an overall strategy to stimulate the economy. The tax incentive for increased construction and development provided in this measure is a starting point.

Therefore, your Committee has amended this measure by defecting its effective date to continue discussion on its merits and provisions.

Your Committee believes that the concept embodied in this measure is worthy of further deliberation. As this measure proceeds through the legislative process, your Committee encourages the Departments of Taxation and Business, Economic Development, and Tourism, and other stakeholders to reach consensus on the scope and probable economic effects of this tax incentive.

As affirmed by the record of votes of the members of your Committee on Economic Development that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1394, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1394, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development,

____________________________

CAROL FUKUNAGA, Chair