STAND. COM. REP. NO. 2536

Honolulu, Hawaii

RE: S.B. No. 2432

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Agriculture and Environment, to which was referred S.B. No. 2432 entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a tax credit for food manufacturers who produce value-added products using local crops.

Your Committee received testimony in support of this measure from the Department of Agriculture and Hawaii Food+ Policy.

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

Your Committee finds that the State has a goal to double local food production by 2030. One barrier to that goal is that there is little access to capital for food manufacturing and few incentives for investment in Hawaii's food manufacturing industry. Your Committee recognizes that value-added food manufacturers in the State face high production costs and narrow profit margins, which imposes financial burdens and deters the creation and distribution of food products in the State. The tax credit as provided in this measure can incentivize food manufacturers to utilize local agricultural yields to reduce food waste; develop new products; and increase revenues in the State.

Your Committee has amended this measure by:

(1) Capping the maximum amount of the tax credit to be claimed by a qualified taxpayer in each taxable year at $100,000; and

(2) Capping the total amount of tax credits to be claimed in the State for each taxable year at $10,000,000.

As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2432, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2432, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,

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MIKE GABBARD, Chair