STAND. COM. REP. NO. 2951

Honolulu, Hawaii

RE:    H.B. No. 2778

       H.D. 2

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Human Services and Public Housing, to which was referred H.B. No. 2778, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAX CREDITS,"

begs leave to report as follows:

     The purpose of this measure is to create an incentive for small businesses to purchase long-term care insurance for their employees by providing a tax credit for the payment of their long-term care insurance premiums.

     Testimony in support of this measure was submitted by the Department of Taxation and the National Association of Insurance and Financial Advisors Hawaii.  Comments on the measure were submitted by the Tax Foundation of Hawaii. 

     Your Committee finds that this measure could provide a very worthwhile incentive to encourage employers to make long-term care insurance available for their employees, which would in turn reduce the future financial burden on the State for the costs of long-term care. 

     Your Committee notes that the Department of Taxation provided testimony identifying an issue relating to the applicability of the tax credit described by the measure to partnerships and other flow-through entities, and indicated that further comment would be submitted to the next Senate committees to hear this measure to address this particular issue.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 2008, and the applicability to taxable years beginning after December 31, 2008; and

     (2)  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 Human Services and Public Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2778, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2778, H.D. 2, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

Respectfully submitted on behalf of the members of the Committee on Human Services and Public Housing,

____________________________

SUZANNE CHUN OAKLAND, Chair