HOUSE OF REPRESENTATIVES

H.B. NO.

627

TWENTY-SIXTH LEGISLATURE, 2011

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to agriculture.

 

 

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

 


     SECTION 1.  Chapter 205, Hawaii Revised Statutes, is amended by adding two new sections in part I to be appropriately designated and to read as follows:

     "§205-A  Eligibility of qualified agricultural processing facilities.  (a)  Any business firm may be eligible to be designated a qualified agricultural processing facility for purposes of section 205-B if the business:

     (1)  Begins the operation of a trade or business in agricultural processing on a parcel of land within an agricultural district;

     (2)  During each taxable year has at least fifty per cent of the agricultural processing facility's gross receipts attributable to the processing of agricultural products grown on a parcel of land within an agricultural district located within the same county; and

     (3)  Either:

         (A)  Increases its average annual number of full-time employees employed at the agricultural processing facility located on a parcel of land within an agricultural district within the same county by at least ten per cent by the end of its first taxable year of participation, and during each subsequent taxable year at least maintains that higher level of employment; or

         (B)  Increases its gross sales of agricultural products processed on a parcel of land within an agricultural district within the same county by not less than two per cent each year.

Receipts from value-added products made from crops grown on a parcel of land within an agricultural district located within the same county and sold at retail pursuant to the limits of subsection (e) shall count toward the gross receipts requirement under paragraph (2).

     (b)  A business firm may also be eligible to be designated a qualified agricultural processing facility for purposes of this chapter if the business:

     (1)  Is actively engaged in agricultural processing in an area immediately prior to the area being designated an agricultural district;

     (2)  Meets the requirements of subsection (a)(2); and

     (3)  Either:

         (A)  Increases its average annual number of full-time employees employed at the business' agricultural processing facility or facilities on a parcel of land within an agricultural district located within the same county by at least ten per cent by the end of the first year of operation, and by at least fifteen per cent by the end of each of the fourth, fifth, sixth, and seventh years of operation, and for businesses eligible for tax credits extending past the seventh year, at least maintains that higher level of employment during each subsequent taxable year; provided that the percentage increase shall be based upon the employee count at the beginning of the initial year of operation within the agricultural district; or

         (B)  Increases its gross sales of agricultural products processed on a parcel of land within an agricultural district located within the same county by not less than two per cent each year.

     (c)  A business firm shall submit annually to the department of business, economic development, and tourism an approved form supplied by the commission that provides the information necessary for the department to determine if it may certify the applicability of the tax credits and exemptions provided in this chapter for qualified agricultural processing facilities.  The commission shall certify to the department of business, economic development, and tourism that the agricultural processing facility of the business firm is located on a parcel of land within an agricultural district.  The department of business, economic development, and tourism, shall, in turn, certify to the commission and the department of taxation that a business firm meets the qualifications of a qualified agricultural processing facility.

     (d)  The form referred to in subsection (c) shall be prima facie evidence of the eligibility of a business for the purposes of this section. 

     (e)  For the purposes of this section, "agricultural processing" means the processing of crops or livestock produced by an agribusiness, as defined in section 205-46.5, into food products or energy.

     "Agricultural processing" includes biofuel processing facilities and agricultural-energy facilities as described in section 205-4.5.

     §205-B  Qualified agricultural processing facilities; tax credit.  (a)  The commission shall certify annually to the department of taxation the applicability of the tax credit provided in this section for a qualified agricultural processing facility against any taxes due the State.  Except for the general excise tax, the credit shall be eighty per cent of the tax due for the first tax year, seventy per cent of the tax due for the second tax year, sixty per cent of the tax due for the third year, fifty per cent of the tax due the fourth year, forty per cent of the tax due the fifth year, thirty per cent of the tax due the sixth year, and twenty per cent of the tax due the seventh year.  The credit shall continue after the seventh year at the rate of twenty per cent of the tax due for each of the subsequent three tax years.  Any tax credit not usable shall not be applied to future tax years.

     (b)  When a partnership is eligible for a tax credit under this section, each partner shall be eligible for the tax credit provided for in this section on the partner's income tax return in proportion to the amount of income received by the partner from the partnership.  Any qualified agricultural processing facility having taxable income from agricultural processing activity, both within and without the agricultural district, shall allocate and apportion its taxable income attributable to the conduct of business.  Tax credits provided for in this section shall only apply to taxable income of a qualified agricultural processing facility attributable to agricultural processing that takes place within an agricultural district  located within the same county.

     (c)  In addition to any tax credit authorized under this section, any qualified agricultural processing facility shall be entitled to a tax credit against any taxes due the State in an amount equal to a percentage of unemployment taxes paid.  The amount of the credit shall be equal to eighty per cent of the unemployment taxes paid during the first year, seventy per cent of the taxes paid during the second year, sixty per cent of the taxes paid during the third year, fifty per cent of the taxes paid during the fourth year, forty per cent of the taxes paid during the fifth year, thirty per cent of the taxes paid during the sixth year, and twenty per cent of the taxes paid during the seventh year.  The credit shall continue after the seventh year in an amount equal to twenty per cent of the taxes paid during each of the subsequent three tax years.

     (d)  Tax credits provided for in subsection (c) shall only apply to the unemployment tax paid on employees employed at the qualified agricultural processing facility's establishment or establishments on a parcel of land within an agricultural district located within the same county.  Any tax credit not usable shall not be applied to future tax years."

     SECTION 2.  In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Qualified Agricultural Processing Facilities; Agricultural District

 

Description:

Establishes a tax credit for qualified agricultural processing facilities that process agricultural products grown within the agricultural district.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.