SB2506

Report Title:

Energy Conservation Tax Credit

 

Description:

Allows the energy conservation tax credit to be taken in 5 equal amounts in 5 successive years.

THE SENATE	S.B. NO.	2506
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO ENERGY CONSERVATION TAX CREDIT.

 

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

SECTION 1. Hawaii remains heavily dependent on petroleum fuel as its main source of energy. While oil accounts for forty per cent of the energy needs of the United States, it accounts for ninety per cent of Hawaii’s energy needs.

As a result, the need to reduce our vulnerability to disruptions in oil supplies is an urgent one. One way to reduce this dependency on oil is by encouraging the use of indigenous resources as our sources of energy. The energy conservation income tax credit, which has been in effect since 1977, is a proven strategy to meet this objective.

Under present law, the energy conservation tax credit may be claimed against net income tax liability for the year in which the solar or wind energy system, heat pump, or ice storage system was purchased and placed in use in Hawaii. Tax credits that exceed the taxpayer’s income tax liability may be used as credit against the taxpayer’s income tax liability in subsequent years until exhausted.

For large energy conservation projects, the amount of energy conservation tax credit may be sufficient to eliminate the taxpayer’s income tax liability for the year. The purpose of this Act is to permit a taxpayer to elect to claim one-fifth of the credit in each of five years, thus reducing the amount of income tax credited in any one year.

SECTION 2. Section 235-12, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Tax credits shall apply only to the actual cost of the solar or wind energy system, heat pump, or ice storage system, including their accessories and installation, and shall not include the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system or heat pump. The tax credit shall be claimed against net income tax liability for the year in which the solar or wind energy system, heat pump, or ice storage system was purchased and placed in use in Hawaii[.]; provided that the taxpayer may claim one-fifth of the credit in each of five years beginning in the year of the purchase and four successive years thereafter. Tax credits that exceed the taxpayer's income tax liability may be used as credit against the taxpayer's income tax liability in subsequent years until exhausted."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2001.

INTRODUCED BY:	_____________________________