Report Title:

Agricultural Lands; Tax Credits

Description:

Provides tax credit for taxes imposed by chapter 235 for real property taxes paid for, or improvements made to, agricultural lands.

HOUSE OF REPRESENTATIVES

H.B. NO.

1500

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to agricultural lands; tax credit.

 

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

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§235-A Agricultural lands; real property tax credit. (a) There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter, who has not taken a deduction for real property taxes paid, a tax credit for real property taxes paid on important agricultural lands designated pursuant to section 205-A or 205-B, that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The tax credit shall be an amount equal to the real property tax paid by the taxpayer on important agricultural lands designated pursuant to section 205-A or 205-B for the taxable year.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) As used in this section, "taxpayer" includes a lessee who pays the real property tax as part of a lease agreement.

(e) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purpose of this section pursuant to chapter 91.

§235-B Agricultural lands; infrastructure improvement credit. (a) There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter, an agricultural infrastructure improvement tax credit for improvements made to agricultural infrastructure on important agricultural lands designated pursuant to section 205-A or 205-B, that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The tax credit shall be an amount equal to the cost of improvements made by the taxpayer to agricultural infrastructure for the taxable year in which the improvements were made.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) For purposes of this section:

"Agricultural infrastructure improvement" means the planning, design, construction, reconstruction, improvement, altering, or repair of supporting infrastructure used or formerly used by a plantation system or other large agricultural operation, including irrigation systems, roads, and drainage systems.

"Drainage systems" means an agricultural system of channels, ditches, pipes, pumps, and accessory facilities established for the purpose of drawing off water from a land area larger than twenty acres.

"Irrigation systems" means the agricultural system of intakes, diversions, wells, ditches, siphons, pipes, reservoirs, and accessory facilities established for the purpose of providing water for agricultural production.

"Roads" means an agricultural system of cane haul roads or ways established to take agricultural products from the fields to processing facilities without using the public highways.

(e) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit make under this section and may adopt rules necessary to effectuate the purpose of this section pursuant to chapter 91."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on its approval only if H.B. No.     , passed in any form by the legislature, regular session of 2005, becomes an Act; provided that section 235-B, Hawaii Revised Statutes, contained in section 1 of this Act shall be repealed on June 30, 2010.

INTRODUCED BY:

_____________________________