STAND. COM. REP. NO. 1787

Honolulu, Hawaii

RE: H.B. No. 612

H.D. 2

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 612, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to incentivize growth in the State's agricultural sector.

Specifically, this measure establishes an income tax credit to alleviate the high costs of production for Hawaii's farmers, ranchers, and fishers.

Your Committee received written comments in support of this measure from the Maui County Council; Ai Pohaku - The Stone Eaters; Good Food Movement; Green Islands Acres, LLC; Hawaii Alliance for Progressive Action; Hawaii Cattlemen's Council; Hawaii Farm Bureau; Hawaii Farmers Union United; Hawaii Farmers Union United, Haleakala Chapter; Kanalani Ohana Farm; Local Food Coalition; Maui Chamber of Commerce; Naike, LLC; Ulupono Initiative; Wakefield and Sons, Inc.; and twenty-five individuals.

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

Your Committee finds that Hawaii farmers, ranchers, and fishers need support to alleviate the high costs associated with agricultural production in the State. Your Committee also finds that ensuring the viability of local food producers is critical to achieving the State's sustainability goals.

Your Committee has amended this measure by:

(1) Clarifying that the tax credit is nonrefundable;

(2) Deleting language inapplicable to nonrefundable income tax credits;

(3) Replacing the terms "eligible farmer" and "farmer or farm business" with "qualified taxpayer;"

(4) Clarifying the administration of the tax credit with regard to pass-through entities;

(5) Clarifying that the amount of the tax credit is based on the taxpayer's net farm income; and

(6) 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 H.B. No. 612, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 612, H.D. 2, S.D. 2.

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

________________________________

DONOVAN M. DELA CRUZ, Chair