Tax Credit; Agriculture

Provides a tax credit for agricultural infrastructure
investments.  (HB2023 HD2)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  The legislature finds that the downsizing of the
 2 sugar industry and the transition from plantation agriculture to
 3 diversified agriculture provides an opportunity for Hawaii's
 4 agricultural industry to expand.  Plantation agriculture created
 5 valuable infrastructures, such as irrigation systems, roads, and
 6 drainage systems.  To build these systems today would cost more
 7 than agricultural enterprises are willing to invest in start-up
 8 costs.
 9      Agricultural expansion requires that these valuable
10 infrastructures be preserved and reconfigured to support new
11 agricultural ventures.  Because sugar companies are unable to
12 construct and to maintain these infrastructures, incentives to
13 encourage private investments to preserve and to enhance existing
14 agricultural infrastructures are necessary.
15      The purpose of this Act is to provide a tax credit for major
16 investment in the planning, design, construction, reconstruction,
17 improvement, altering, or repair of large agricultural
18 infrastructures.

Page 2                                                     2023
                                     H.B. NO.           H.D. 2

 1      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and to
 3 read as follows:
 4      "235-    Agricultural infrastructure improvement tax
 5 credit.  (a)  There shall be allowed to each taxpayer, subject to
 6 the taxes imposed by this chapter, an agricultural infrastructure
 7 improvement tax credit that shall apply to the taxpayer's net
 8 income tax liability, if any, imposed by this chapter for the
 9 taxable year in which the credit is properly claimed.  The tax
10 credit shall be an amount equal to      per cent of the cost of
11 improvements over $20,000 made by the taxpayer to agricultural
12 infrastructure for the taxable year in which the improvements
13 were made.
14      (b)  The credit allowed under this section shall be claimed
15 against the net income tax liability for the taxable year.  For
16 the purpose of this credit, the "net income tax liability" means
17 net income tax liability reduced by all other credits allowed
18 under this chapter.
19      (c)  If the tax credit under this section exceeds the
20 taxpayer's income tax liability, the excess of the tax credit
21 over liability may be used as a credit against the taxpayer's
22 income tax liability in subsequent years until exhausted.  All
23 claims, including any amended claims, for tax credits under this

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                                     H.B. NO.           H.D. 2

 1 section shall be filed on or before the end of the twelfth month
 2 following the close of the taxable year for which the credit may
 3 be claimed.  Failure to comply with the foregoing provision shall
 4 constitute a waiver of the right to claim the credit.
 5      (d)  As used in this section:
 6      "Agricultural infrastructure improvement" means the
 7 planning, design, construction, reconstruction, improvement,
 8 altering, or repair of irrigation systems and drainage systems.
 9      "Drainage systems" means an agricultural system of channels,
10 ditches, pipes, pumps, and accessory facilities established for
11 the purpose of drawing off water from a land area larger than
12 twenty acres.
13      "Irrigation systems" means the agricultural system of
14 intakes, diversions, wells, ditches, siphons, pipes, reservoirs,
15 and accessory facilities established for the purpose of providing
16 water for agricultural production."
17      SECTION 3.  New statutory material is underscored.
18      SECTION 4.  This Act shall take effect upon its approval and
19 shall be repealed on January 1, 2005; provided that this Act
20 shall apply to taxable years beginning after December 31, 1999,
21 and before January 1, 2005.