Lawmakers OK tax credits for hotels, homeowners

By Kevin Dayton
Advertiser Capitol Bureau Chief

A bill to give tax credits to homeowners and hotel owners who build or renovate won unanimous approval in the state House yesterday, and now goes to Gov. Ben Cayetano, who is expected to sign it.

Lawmakers approved the bill in special session this week in hopes it would stimulate construction after the economy took an alarming dive after the Sept. 11 terrorist attacks.

House Transportation Chairman Joseph Souki, D-8th (Waiehu, Ma'alaea, Napili), has called the tax credit "a good start," but told his colleagues he is worried it isn't generous enough. Souki, a key supporter of the bill, suggested hotel owners may still find it difficult to borrow money for projects here.

The bill would grant hotel owners a tax credit equal to 10 percent of the value of any new hotel or time-share renovations or construction, provided the money is spent by June 30, 2003. Hotel owners could use the credit to reduce their state income taxes, costing the state about $5 million a year.

The same measure would give homeowners a 4 percent construction tax credit that could be used to reduce their income tax liability. Qualifying costs would include money spent on plans, design, equipment and construction to build or renovate a home from Jan. 1, 2001, to July 2002. The credit will cost the state $16 million to $18 million a year.

The residential credit applies to construction costs of only $250,000 for each property, for a maximum $10,000 credit per property.

The maximum credit could be claimed for more than one property, said state Tax Director Marie Okamura.