STAND. COM. REP. NO. 1594

Honolulu, Hawaii

, 2005

RE: H.B. No. 1200

H.D. 2

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1200, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO STATE ENTERPRISE ZONES,"

begs leave to report as follows:

The purpose of this measure is to amend the state enterprise zone program to allow the participation of more agricultural businesses.

Specifically, this measure amends the state enterprise zone program by:

(1) Allowing agricultural businesses to remain eligible for tax incentives in the event of force majeure;

(2) Extending an agricultural business' eligibility for tax incentives by the duration, in months, of a force majeure event;

(3) Including agriculture among the areas in the State that need particular attention in terms of revitalization by means of regulatory flexibility and tax incentives;

(4) Amending the employment requirements for agricultural businesses by allowing them to substitute annual gross revenue requirements if they are unable to meet annual full-time employee requirements and including leased employees and employees under a joint employer relationship in the definition of "full-time employee"; and

(5) Clarifying that enterprise zone businesses cannot claim the same tax credits or exemptions in other tax incentive programs.

Your Committee finds that state enterprise zones encourage agricultural activity and provide good business incentives for small businesses in this State. However, your Committee is concerned that the language of the bill does not appear to provide sufficient guidance on the definition and concept of the term, "joint employer". Your Committee further finds that provisions within this measure may be misinterpreted to disallow the taking of credits beyond what was intended. For example, it may be misinterpreted that the capital goods excise tax credit, which is an income tax credit, would be disallowed under current provisions of this measure. In addition, the use of the words, "no taxpayer", in referring to the disallowed credit or exemption may implicate businesses that are not even located in an enterprise zone.

Accordingly, your Committee has amended this measure by:

(1) Adding a definition of "joint employer" that is comparable to the definition of the same under the Fair Labor Standards Act (C.F.R. §791.2(b));

(2) Clarifying that the taxpayer claiming a tax credit or exemption may not claim any other tax credit or exemption in any chapter that is identical to the claimed tax credit or exemption; and

(3) Making technical nonsubstantive amendments for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1200, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1200, H.D. 2, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair