Provides a capital gains tax credit for Hawaii based investments acquired between November 1, 2001 and December 31, 2002 on condition that the investment is held for at least two calendar years.

A BILL FOR AN ACT

SECTION 1. The terrorists attacks upon the United States on September 11, 2001, caused far-reaching economic consequences throughout the United States and Hawaii. The impact on our economy caused by the terrorist attacks and the responses to those attacks underscore the fact that Hawaii's economy depends, in large part, on events outside of our control. The legislature finds that it can use legislation to provide incentives that can control some economic circumstances and aid in economic recovery. The purpose of this Act is to provide tax incentives to invest capital in Hawaii, aiding in short term economic recovery and laying the foundation for long-term economic growth.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Capital gains tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by chapter 235-51(f), a capital gains tax credit, which shall be deductible from the taxpayer's income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provisions shall constitute a waiver of the right to claim the credit.

(c) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(d) The tax credit allowed under this section shall be available for taxable years in which:

(e) To qualify for the credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.