STAND. COM. REP. NO. 3494

Honolulu, Hawaii

RE:    H.B. No. 2166

       H.D. 1

       S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B. No. 2166, H.D. 1, S.D. 1, entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to provide tax relief to low-income households by expanding the income tax credit eligibility for low income-household renters, based on adjusted gross income and filing status.

     Your Committee received written comments in support of this measure from Americans for Democratic Action, Hawaii Chapter; Caring Across Generations; Catholic Charities Hawaii; The CHOW Project; Community Alliance on Prisons; Hawaii Alliance for Community-Based Economic Development; Hawaii Appleseed Center for Law and Economic Justice; Hawaii Children's Action Network; IMUAlliance; Kokua Kalihi Valley; League of Women Voters of Hawaii; LGBT Caucus of the Democratic Party of Hawaii; Partners in Care; PHOCUSED; and four individuals.

     Your Committee received comments on this measure from the Department of Taxation; Tax Foundation of Hawaii; and Honolulu Community Action Program, Inc.

     Your Committee finds that the income threshold to qualify for the income tax credit for low-income household renters has not been amended since 1989, and the amount of the tax credit has not been amended since 1981.  At the current income threshold and tax credit amount, many households that are at risk of falling into poverty do not qualify for the tax credit, and those that do qualify, do not receive a tax credit of any significant amount.  Your Committee finds that expanding both the income threshold and the tax credit amount will provide low-income household renters with meaningful tax relief.

     Your Committee recognizes that, according to the Department of Taxation's estimate, this measure is expected to have an annual negative fiscal impact of $11,200,000 to the general fund.

     Your Committee has amended this measure by:

     (1)  Specifying the dollar amounts of the tax credit;

     (2)  Adding a separate filing category for heads of household; and

     (3)  Clarifying the filing status descriptions.

     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. 2166, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2166, H.D. 1, S.D. 2.

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

________________________________

JILL N. TOKUDA, Chair