HB291 HD1 HSCR286

 

STAND. COM. REP. 286

Honolulu, Hawaii

, 2003

RE: H.B. No. 291

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred H.B. No. 291 entitled:

"A BILL FOR AN ACT RELATING TO THE JOB CREATION INCOME TAX CREDIT,"

begs leave to report as follows:

The purpose of this bill is to build up Hawaii's workforce by:

(1) Establishing a temporary job creation income tax credit (Tax Credit) equal to three percent of an employee's salary, up to $1,500 per employee; and

(2) Promoting the creation of more stable, higher paying jobs by only applying the Tax Credit to full-time employees whose annual wages are $39,000 or higher, and who remain employed by the taxpayer for at least three years.

ALTRES, Inc., supported this measure. The Chamber of Commerce of Hawaii, Enterprise Honolulu, Cendant Corporation/Fairfield Resorts, and Hawaii Healthcare Professionals, Inc., supported the intent of this measure.

The Department of Taxation and Tax Foundation of Hawaii offered comments.

Your Committee finds that creating more jobs, especially high-level, professional positions, is the key to revitalizing Hawaii's economy. The Tax Credit established in this bill represents a solid starting point for encouraging businesses to hire more employees.

Testimony indicated that the $39,000 average payroll requirement in this bill is too high for most small businesses, as many small businesses cannot afford to hire new employees at such high wages. In fact, $27,000 more accurately reflects the average wage base.

Accordingly, your Committee has amended this bill by:

(1) Reducing the minimum annual salary of qualifying employees from $39,000 to $25,000, which better reflects the average wage base for an entry-level professional;

(2) Requiring that qualifying employees be employed by the taxpayer for at least two, instead of three, years;

(3) Changing the amount of the Tax Credit to $5,000 per employee, provided that an amount equal to two-thirds of the credit is used for workforce training;

(4) Clarifying that the Tax Credit will be available for only three years; and

(5) Making technical, nonsubstantive amendments for purposes of style, clarity, and consistency.

As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 291, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 291, H.D. 1, and be referred to the Committee on Finance.

 

Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,

 

		____________________________ BRIAN SCHATZ, Chair