STAND. COM. REP. NO.1359

Honolulu, Hawaii

, 2003

RE: H.B. No. 1616

H.D. 1

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1616, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LONG-TERM CARE,"

begs leave to report as follows:

The purpose of this measure is to establish a long-term care income tax to implement the long-term care financing program established under chapter 346C, Hawaii Revised Statutes.

This bill currently contains a tax credit of up to $120 per year for five years, and a tax credit of up to $180 per year for the next five years for persons who both pay the long-term care tax and purchase a long-term care insurance policy. This bill further contains two appropriations of unspecified amounts made for fiscal year 2003-2004 for start-up costs to collect the long-term care income tax and to administer the long-term care income tax under chapter 346C, Hawaii Revised Statutes. The bill also requires the long-term care benefits fund to reimburse the general fund for start-up costs.

In addition, currently this bill:

(1) Clarifies that the tax is in addition to the regular withholding of income taxes;

(2) Exempts low-income taxpayers who are taxed pursuant to section 235-51(c) or (d), Hawaii Revised Statutes, if the taxpayer's gross income is less than $10,000, or low-income taxpayers who are taxed pursuant to section 235-51(a) or (b), Hawaii Revised Statutes, if the taxpayer's gross income is less than $16,000;

(3) Adds new sections relating to portability, vesting, and defined benefit;

(4) Adds to chapter 235, Hawaii Revised Statutes, two new sections relating to income tax exclusions for the receipt of defined benefits and a long-term care tax credit;

(5) Makes application of the long-term care tax credit to taxable years beginning after December 31, 2005, and ending before January 1, 2014;

(6) Exempts the long-term care benefits fund from transfers for central service and administrative expenses;

(7) Requires payment of the long-term care income tax until the individual begins receiving benefits, if the individual is vested;

(8) Requires the board of trustees to establish a plan for voluntary contributions for persons who do not file state income tax returns because they only receive pension income, and making a conforming amendment;

(9) Extends the duration of service by the temporary board of trustees of the Hawaii long-term care financing program from June 30, 2003, to the time when the permanent board is appointed; and

(10) Sets the effective date to upon approval.

Upon further consideration, your Committee has amended this bill by specifying the date of benefit increases as July 1 in each of the years 2008 to 2013 in section 235-I(b)(1) to (6), Hawaii Revised Statutes, on page 8, lines 15-20. Your Committee has also made the following technical amendments:

(1) Clarifying that the tax credit is $120 per year by eliminating the phrase "$10 per month up to" for the first five years, and is $180 per year by eliminating the phrase "$15 per month up to" (section 235-   (b), Hawaii Revised Statutes, on page 10, lines 16 and 20);

(2) Clarifying that no tax credit is allowed if the taxpayer also takes a deduction pursuant to section 213 of the IRC by deleting the reference to "for that portion of the costs for which the deduction was taken" (section 235-   (c), Hawaii Revised Statutes, on page 11, lines 2-3);

(3) Changing "and" to "or" (section 235-   (d)(6), Hawaii Revised Statutes, on page 11, line 14);

(4) Tightening up the language regarding withholding of taxes to reflect the difference between income tax and the long-term care tax (section 235-61(c), Hawaii Revised Statutes, on page 21, line 7);

(5) Adding individuals who receive Social Security benefits, interest, dividends, or other income that is insufficient to require filing a tax return to those individuals who receive pensions, for whom the board of trustees is required to establish a procedure for voluntary payment of the long-term care tax (section 346C-4(a)(5), Hawaii Revised Statutes, on page 24, line 5);

(6) Changing the effective date of the bill to July 1, 2004;

(7) Changing from December 31, 2005, to December 31, 2003, the date after which the long-term care income tax applies; and

(8) Changing the effective date for the appropriations made in sections 13 and 14 of the bill to July 1, 2004.

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 H.B. No. 1616, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1616, H.D. 1, S.D. 2.

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

____________________________

BRIAN T. TANIGUCHI, Chair