STAND. COM. REP. NO. 2963

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 1907

       H.D. 1

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

 

Madam:

 

     Your Committee on Ways and Means, to which was referred H.B. No. 1907, H.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

begs leave to report as follows:

 

     The purpose of this measure is to temporarily suspend the income tax net operating loss carryback deduction for losses generated in 2009 and 2010.

 

     The measure also temporarily places a cap on itemized deductions claimed on state income tax returns and removes the refunding feature of the capital goods excise tax credit from January 1, 2010, to December 31, 2015.

 

     The Department of Taxation, Central Pacific Bank, the Chamber of Commerce of Hawaii, and Rolf Advertising testified in opposition to the measure.  The Tax Foundation of Hawaii and First Wind submitted comments on the measure.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

 

     Your Committee finds that, given the current economic downturn, eliminating the net operating loss carryback deduction would impose new tax burdens on all businesses, including sole proprietorships, by effectively increasing their taxes at a time when they are less able to pay.  Your Committee also finds that this would discourage the establishment of new businesses in Hawaii.

 

     Accordingly, your Committee has amended this measure by:

 

     (1)  Deleting part I of the measure regarding the net operating loss carryback deduction;

 

     (2)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; 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 Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1907, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1907, H.D. 1, 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,

 

 

 

____________________________

DONNA MERCADO KIM, Chair