STAND. COM. REP. NO. 582

Honolulu, Hawaii

RE: S.B. No. 339

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 339, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE IMPORTANT AGRICULTURAL LAND QUALIFIED AGRICULTURAL COST TAX CREDIT,"

begs leave to report as follows:

The purpose and intent of this measure is to provide incentives to landowners and farmers to continue agricultural operations on agricultural lands.

Specifically, this measure:

(1) Extends the time that the Department of Agriculture may certify the important agricultural land qualified agricultural cost tax credit from December 31, 2021, to December 31, 2030; and

(2) Provides that a taxpayer may claim the important agricultural land qualified agricultural cost tax credit in the third taxable year after application for first-year certification of the credit.

Your Committee received written comments in support of this measure from the Department of Agriculture; Agribusiness Development Corporation; Office of Planning; Carpenter & Carpenter, Inc.; Ulupono Initiative; Hawaii Crop Improvement Association; Hawaii Farm Bureau; Land Use Research Foundation of Hawaii; Kamehameha Schools; and one individual.

Your Committee received written comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the important agricultural land qualified agricultural cost tax credit provides an important incentive to farmers to keep agricultural lands in productivity, thereby increasing the State's food security, sustainability, and economic diversity. Your Committee further finds that this measure will help to ensure that the State's most important agricultural lands remain available for future generations of Hawaii's farmers.

Your Committee has amended this measure by:

(1) Clarifying that a taxpayer may first claim the tax credit no earlier than in the third taxable year after the taxable year during which the taxpayer applied to the Department of Agriculture for first-year certification of the tax credit;

(2) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

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

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 S.B. No. 339, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 339, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair