If enacted, HB1145 would amend Chapter 235 of the Hawaii Revised Statutes by requiring new income tax credits starting January 1, 2022, to have a clear expiration date or a systematic reduction over a three-year decline once the initial five years expire. This legislative innovation is designed to ensure that tax benefits remain aligned with state financial health and economic conditions, thereby allowing for timely adjustments when needed.
House Bill 1145, introduced in the Hawaii legislature, seeks to reform the establishment of new income tax credits by instituting a requirement for a five-year sunset provision or a gradual reduction of the credits. This is intended to compel the legislature to review the effectiveness and necessity of these tax credits regularly. The bill aims to enhance legislative oversight over tax policy, preventing the long-term entrenchment of tax credits without re-evaluation.
The bill may face contention as it alters the comfort of taxpayers who could rely on stable tax credits for budgeting and financial planning. Critics might argue that frequent reviews could destabilize tax planning for individuals and businesses. Moreover, there may be concerns about the administrative burden it places on the legislature and tax agencies to continuously assess tax policies, especially during periods of economic uncertainty.