Police Officers; Tax Relief

Exempts police officers in the city and county of Honolulu from
paying state income tax.

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

                     A BILL FOR AN ACT



 1      SECTION 1.  The purpose of this Act is to exclude the
 2 regular base salary of sworn police officers of the city and
 3 county of Honolulu from calculation of state gross income,
 4 adjusted income, and taxable income.
 5      The caliber and training of Honolulu police officers have
 6 made the department a recruiting ground for mainland departments,
 7 and many experienced officers are leaving Honolulu for higher-
 8 paying jobs and a lower cost of living.  This loss of experienced
 9 officers and the lack of sufficient numbers of qualified recruits
10 has resulted in numerous vacancies and staffing shortages of
11 sworn officers.  This temporarily provides a financial incentive
12 intended to retain officers and attract qualified applicants
13 until a more permanent solution can be implemented.
14      SECTION 2.  Section 235-7, Hawaii Revised Statutes, is
15 amended by amending subsection (a) to read as follows:
16      "(a)  There shall be excluded from gross income, adjusted
17 gross income, and taxable income:

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 1      (1)  Income not subject to taxation by the State under the
 2           Constitution and laws of the United States;
 3      (2)  Rights, benefits, and other income exempted from
 4           taxation by section 88-91, having to do with the state
 5           retirement system, and the rights, benefits, and other
 6           income, comparable to the rights, benefits, and other
 7           income exempted by section 88-91, under any other
 8           public retirement system;
 9      (3)  Any compensation received in the form of a pension for
10           past services;
11      (4)  Compensation paid to a patient affected with Hansen's
12           disease employed by the State or the United States in
13           any hospital, settlement, or place for the treatment of
14           Hansen's disease;
15      (5)  Except as otherwise expressly provided, payments made
16           by the United States or this State, under an act of
17           Congress or a law of this State, which by express
18           provision or administrative regulation or
19           interpretation are exempt from both the normal and
20           surtaxes of the United States, even though not so
21           exempted by the Internal Revenue Code itself;
22      (6)  Any income expressly exempted or excluded from the
23           measure of the tax imposed by this chapter by any other

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 1           law of the State, it being the intent of this chapter
 2           not to repeal or supersede any such express exemption
 3           or exclusion;
 4      (7)  The first $1,750 received by each member of the reserve
 5           components of the Army, Navy, Air Force, Marine Corps,
 6           or Coast Guard of the United States of America, and the
 7           Hawaii National Guard as compensation for performance
 8           of duty;
 9      (8)  Income derived from the operation of ships or aircraft
10           if the income is exempt under the Internal Revenue Code
11           pursuant to the provisions of an income tax treaty or
12           agreement entered into by and between the United States
13           and a foreign country, provided that the tax laws of
14           the local governments of that country reciprocally
15           exempt from the application of all of their net income
16           taxes, the income derived from the operation of ships
17           or aircraft which are documented or registered under
18           the laws of the United States;
19      (9)  The value of legal services provided by a prepaid legal
20           service plan to a taxpayer, the taxpayer's spouse, and
21           the taxpayer's dependents;
22     (10)  Amounts paid, directly or indirectly, by a prepaid
23           legal service plan to a taxpayer as payment or

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 1           reimbursement for the provision of legal services to
 2           the taxpayer, the taxpayer's spouse, and the taxpayer's
 3           dependents;
 4     (11)  Contributions by an employer to a prepaid legal service
 5           plan for compensation (through insurance or otherwise)
 6           to the employer's employees for the costs of legal
 7           services incurred by the employer's employees, their
 8           spouses, and their dependents; [and]
 9     (12)  Amounts received in the form of a monthly surcharge by
10           a utility acting on behalf of an affected utility under
11           section 269-16.3 shall not be gross income, adjusted
12           gross income, or taxable income for the acting utility
13           under this chapter. Any amounts retained by the acting
14           utility for collection or other costs shall not be
15           included in this exemption[.]; and
16      (13) The regular base salary of sworn police officers in the
17           city and county of Honolulu, State of Hawaii."
18      SECTION 3.  Statutory material to be repealed is bracketed.
19 New statutory material is underscored.
20      SECTION 4.  The department of taxation shall report to the
21 legislature no later than the convening of the regular session of
22 2003 on the fiscal impact of extending this Act.

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 1      SECTION 5. This Act, upon approval, shall take effect
 2 January 1, 2000, and shall be repealed as of December 31, 2003;
 3 provided that and section 235-7, Hawaii Revised Statutes, shall
 4 be reenacted in the form in which it read on the day before
 5 approval of this Act.
 7                       INTRODUCED BY:  ___________________________