STAND. COM. REP. NO. 759-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2961

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 2961, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ETHANOL,"

begs leave to report as follows:

The purpose of this bill is to:

(1) Change the existing ethanol investment tax credit to a facility tax credit that provides an incentive based on a minimum production capacity of 500,000 gallons at a facility, provided that:

(a) The credit does not exceed the amount invested in the facility;

(b) The facility operated in the taxable year at a production level of at least 75 per cent of its nameplate capacity on an annualized basis; and

(c) The taxpayer does not claim or receive both this credit and the high technology business investment tax credit;

(2) Clarify the definitions of "investment," "nameplate capacity," "owner," and "qualifying ethanol production";

(3) Require the Department of Business, Economic Development, and Tourism (DBEDT) to maintain records of investments of qualifying ethanol production facilities and to certify the amount of the tax credit; and

(4) Cap the total amount of all credits certified by DBEDT at $12,000,000 per year.

ILWU Local 142 and Hawaii Agriculture Research Center submitted testimony in support of this measure. Clean Fuels Hawaii, Maui Ethanol LLC, and DBEDT supported this measure with amendments. The Department of Taxation (DoTax) supported the intent of this measure with amendments. The Tax Foundation of Hawaii offered comments.

Your Committee has amended this bill by:

(1) Incorporating the latest definition of "investment" as negotiated by DoTax and the proponents of this measure;

(2) Removing the definition of "owner";

(3) Clarifying that in the case of a taxable year in which the credit exceeds the amount invested in the facility, only the portion that does not exceed the investment can be claimed and allowed;

(4) Specifying the bill's applicability to the taxpayer rather than the facility owner;

(5) Changing the effective date to July 1, 2010, to facilitate further discussion; and

(6) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2961, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2961, H.D. 2.

 

 

 

Respectfully submitted on behalf of the members of the Committee on Finance,

 

____________________________

DWIGHT Y. TAKAMINE, Chair