REPORT TITLE: 
Tax Credit; Agriculture


DESCRIPTION:
Provides a tax credit for agricultural infrastructure
investments and for drought mitigation water storage facility.
(SD2)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2023
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                S.D. 2
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO AGRICULTURAL INFRASTRUCTURE.


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

 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 legislature further finds that farmers and ranchers
 
16 during periods of drought suffer from loss of crops and
 
17 livestock.  These losses can be minimized by the construction of
 
18 water storage facilities to alleviate water problems during times
 
19 of drought.
 

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

 
 1      The purpose of this Act is to provide a tax credit for major
 
 2 investment in the planning, design, construction, reconstruction,
 
 3 improvement, altering, or repair of large agricultural
 
 4 infrastructures and the construction of drought mitigating water
 
 5 storage facilities.
 
 6      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 
 7 by adding two sections to be appropriately designated and to read
 
 8 as follows:
 
 9      "235-    Agricultural infrastructure improvement tax
 
10 credit.  (a)  There shall be allowed to each taxpayer, subject to
 
11 the taxes imposed by this chapter, an agricultural infrastructure
 
12 improvement tax credit that shall apply to the taxpayer's net
 
13 income tax liability, if any, imposed by this chapter for the
 
14 taxable year in which the credit is properly claimed.  The tax
 
15 credit shall be an amount equal to ten per cent of the cost of
 
16 agriculture infrastructure improvements over $200,000 made by the
 
17 taxpayer for the taxable year in which the improvements were
 
18 made.
 
19      (b)  The credit allowed under this section shall be claimed
 
20 against the net income tax liability for the taxable year.  For
 
21 the purpose of this credit, the "net income tax liability" means
 
22 net income tax liability reduced by all other credits allowed
 

 
 
 
Page 3                                                     2023
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 under this chapter.
 
 2      (c)  If the tax credit under this section exceeds the
 
 3 taxpayer's income tax liability, the excess of the tax credit
 
 4 over liability may be used as a credit against the taxpayer's
 
 5 income tax liability in subsequent years until exhausted.  All
 
 6 claims, including any amended claims, for tax credits under this
 
 7 section shall be filed on or before the end of the twelfth month
 
 8 following the close of the taxable year for which the credit may
 
 9 be claimed.  Failure to comply with the foregoing provision shall
 
10 constitute a waiver of the right to claim the credit.
 
11      (d)  As used in this section:
 
12      "Agricultural infrastructure improvement" means the
 
13 planning, design, construction, reconstruction, improvement,
 
14 altering, or repair of irrigation systems and drainage systems.
 
15      "Drainage systems" means an agricultural system of channels,
 
16 ditches, pipes, pumps, and accessory facilities established for
 
17 the purpose of drawing off water from a land area larger than
 
18 twenty acres.
 
19      "Irrigation systems" means the agricultural system of
 
20 intakes, diversions, wells, ditches, siphons, pipes, reservoirs,
 
21 and accessory facilities established for the purpose of providing
 
22 water for agricultural production.
 

 
 
 
Page 4                                                     2023
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1      235-     Drought mitigating water storage facility; credit.
 
 2 (a)  There shall be allowed to each taxpayer, subject to the
 
 3 taxes imposed by this chapter, for the construction of a new
 
 4 water storage facility or repair or reconstruction of an existing
 
 5 water storage facility necessary for drought mitigation purposes,
 
 6 a tax credit that shall apply to the taxpayer's net income tax
 
 7 liability, if any, imposed by this chapter for the taxable year
 
 8 in which the credit is properly claimed.  The tax credit shall be
 
 9 an amount equal to ten per cent of the cost of construction of a
 
10 new water storage facility or the reconstruction or improvement
 
11 of any existing water storage facility paid by the taxpayer for
 
12 the taxable year in which the water storage facility was
 
13 constructed, reconstructed, or improved.
 
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
 

 
 
 
Page 5                                                     2023
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 claims, included any amended claims, for tax credits under this
 
 2 section shall be filed on or before the end of the twelfth month
 
 3 following the close of the taxable year for which the credit may
 
 4 be claimed.  Failure to comply with the foregoing provision shall
 
 5 constitute a waiver of the right to claim the credit.
 
 6      (d)  As used in this section "water storage facility" means
 
 7 a water storage facility with a capacity of more than forty
 
 8 thousand gallons certified pursuant to rules adopted by the
 
 9 department of agriculture as necessary for drought mitigation
 
10 purposes."
 
11      SECTION 3.  New statutory material is underscored.
 
12      SECTION 4.  This Act shall take effect on July 1, 3000, and
 
13 shall be repealed on January 1, 2005; provided that this Act
 
14 shall apply to taxable years beginning after December 31, 1999,
 
15 and before January 1, 2005.