honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted at 12:51 p.m., Friday, April 4, 2003

House panel OKs tax credits

By Sean Hao
Advertiser Staff Writer

The House Finance Committee kept a slate of proposed tax credits alive yesterday, including those aimed at increasing use of renewable energy, and easing the tax burden of low-income families, the film industry, airlines and the Ko Olina Resort.

The panel approved tax credits for further development of the Ko Olina Resort a day after it advanced a credit for an ocean science center in Kaka'ako. Both the Kaka'ako and Ko Olina projects include aquarium attractions, raising concerns in some quarters about whether there's enough business to support both of them.

If passed by the full House, lawmakers will have to decide in conference committee whether the state's economy can handle two aquarium projects.

The House panel also left for a later decision the dollar amounts for the Ko Olina credit. It is expected to be valued at $75 million. Last year's Legislature approved a measure granting $75 million in tax breaks over 10 years for development at Ko Olina. Former Gov. Ben Cayetano vetoed the measure.

Developers contend the project would spur $700 million in commercial development over a decade, generate $186 million in tax revenue, 10,000 construction jobs and 2,000 permanent jobs.

Gov. Linda Lingle supports the Ko 'Olina aquarium plan, but only if most of that savings is used to train workers.

"That side of the island desperately needs jobs and job training." said Maile Shimabukuro, D-45th (Wai'anae, Makaha), a member of the House Finance Committee.

Among the other tax incentives passed by the committee yesterday:

• A measure to increase the standard deduction for state income taxes. The specific amount of the higher deduction will be hashed out at a later date.

• A tax credit to offset the cost of long-term care insurance. The credit would be worth the lesser of $2,500 or 50 percent of the amount paid to purchase the insurance.

• A plan to fund a state-sponsored long-term care program by imposing a graduated monthly tax, starting at $10, on all Hawaii workers.

• An increase in the motion picture and television production tax credit to as much as 8 percent for costs incurred on O'ahu and up to 10 percent on the Neighbor Islands.

• Tax credits to offset airport landing fees for airlines. The bill would authorize the Department of Transportation to waive landing fees and other airport fees paid by airlines for 30 days and could defer those fees for two subsequent 30-day periods for qualifying carriers.

Lawmakers also advanced a permanent extension of the current 35 percent income tax credit for solar water heaters and a 20 percent tax credit for wind-power systems. The current renewable energy credit program, which costs the state between $4 million and $5 million a year, expires June 30.

Advocates of the tax credit, which includes sellers of solar water heaters, contend such technologies reduce the state's demand for oil used to drive electrical power plants. The credit equates to 35 percent of the cost of such a system or a maximum of $1,750 per residence, whichever is less.

Although technologies such as solar water heaters can lower electricity bills, there's little incentive to purchase the systems without the tax credit, said Rick Reed, president of the Hawaii Solar Energy Association.

"The credit is the linchpin," he said. "It's the thing that gets the whole thing moving."

Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i, agreed to the importance of an incentive for renewable energy, but said the state should investigate ways to make the costly technology available to those of fewer means.

Kalapa suggested legislators consider creating a low-interest loan program for those interested in installing such devices. "Just think how many more solar water heaters we can put out there" under such a program, he said.

These bills now go to a vote by the full House.

The Associated Press contributed to this article.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.