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The Honolulu Advertiser

Posted at 9:46 a.m., Thursday, February 27, 2003

Tax-credit bill advances at Capitol

By B.J. Reyes
Associated Press

House lawmakers yesterday advanced a handful of tax-credit proposals but added a caveat that taxpayers wouldn't be able to claim the breaks unless the state economy is deemed healthy enough to support them.

"Unless we have a level of economic activity that can support these tax credits ­ some people would refer to them as giveaways ­ it would appear prudent to ensure that we reach a level to support further tax credits," said House Finance Chairman Dwight Takamine, D-Hawai'i-Hilo.

Proposals advanced by the Finance Committee included a measure to provide tax credits for people who purchase long-term care insurance policies and a proposal that would give tax breaks to businesses that create new jobs over a two-year period.

All of the tax-credit measures were amended to include an expiration date, to allow periodic review of their effectiveness, and what Takamine called an economic "trigger."

Taxpayers would only be allowed to claim the tax breaks if general fund tax collection revenues in two consecutive fiscal years is 7.5 percent higher than the previous two fiscal years.

The amended bill requires the state tax director to advise the governor of general fund tax collection revenues each year. When the 7.5 percent growth indicator is met, the governor would then issue a declaration stating that taxpayers could claim the tax credits.

Only then would taxpayers be able to claim the credits.

Noting that each tax credit takes revenue away from the state, Takamine said lawmakers want to "make sure we have a good handle on what is happening when we add up the pluses and the minuses ­ do we come out ahead?"

Rep. Colleen Meyer, R-La'ie-Kahalu'u, questioned whether such language was needed in the tax-credit bills.

"That's a pretty broad, sweeping thing you're putting in there," she said. "We, as legislators, have the ability to pass or not to pass a bill. By putting that in writing in the bills having to do with every tax credit seems like a little bit over the top to me."

Takamine noted that the legislative session is less than halfway over, meaning lawmakers still have time to study all of the measures.

"We need to be cognizant of the fiscal situation that we face," Takamine said. "The bills are still going through a number of changes. This will allow the discussion to continue while we take a look at those concerns."