Report Title:

Income Tax Credit; Irrigation

Description:

Establishes an income tax credit for farmers who are forced to purchase water at higher rates from county water boards rather than at lower state irrigation system rates. Establishes the amount of the credit as the difference in the cost of water at the rates charged by the county board of water supply and the state irrigation system. Defines "farmer" as one who derives at least 50% of gross income from farming. (SD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1033

TWENTY-THIRD LEGISLATURE, 2005

H.D. 1

STATE OF HAWAII

S.D. 1


 

A BILL FOR AN ACT

 

RELATING TO INCOME TAX.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that state irrigation systems do not provide water to all farmers throughout the State. The rates for these state irrigation systems are substantially lower than the rates charged by the county boards of water supply. This disparity results in the inequitable treatment of farmers who pay less for their water within state irrigation project areas and farmers who purchase water from the county.

The State has an obligation to promote diversified agriculture and provide equitable treatment to all farmers. The legislature finds that this equity can only be reached by offering a tax credit to farmers who must purchase water from the counties at higher rates.

The purpose of this Act is to provide equitable treatment to all farmers by offering a tax credit to farmers who do not have access to a state irrigation project and are forced to purchase water from the county at higher rates.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Farmers irrigation tax credit. (a) Every taxpayer who files an individual or corporate income tax return for a taxable year and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state individual income tax purposes, may claim a farmers irrigation tax credit against the taxpayer's individual or corporate income tax liability for the taxable year in which the income tax return is being filed; provided that the taxpayer:

(1) Derives at least fifty per cent of the taxpayer's gross income from farming;

(2) Purchases water from a county board of water supply; and

(3) Lacks access to state irrigation projects under chapter 167.

(b) The amount of the credit shall be equal to the difference between:

(1) The amount paid during the tax year by the taxpayer for water purchased from the county; and

(2) The amount the taxpayer would have paid during the tax year for water had the taxpayer had access to a state irrigation system,

for the taxable year in which the tax return is being filed.

(c) The tax credit claimed by a taxpayer pursuant to this section shall be deductible from the taxpayer's income tax liability, if any, for the tax year in which the credit is properly claimed. If the tax credit claimed by a taxpayer exceeds the amount of income tax payment due from the taxpayer, the excess of credit over payment due shall be refunded to the taxpayer; provided that:

(1) The tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and

(2) No refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(d) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section.

(e) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year in which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) The director may adopt rules pursuant to chapter 91 necessary for the purposes of this section."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2004.