The bill is expected to have a significant impact on state laws related to agricultural tax credits, particularly by enhancing the existing framework that encourages investment in essential agricultural infrastructure. By removing the financial limits on the credits in the first three years of a project's existence, it is anticipated that a greater number of agricultural projects will become financially viable. This change aims to foster additional investments in necessary infrastructure improvements, including irrigation systems, which are crucial for sustainable agricultural practices.
SB985 aims to amend the existing tax credit framework for agriculture in Hawaii by removing the cap on the amount of tax credits that can be claimed in the initial years of agricultural operations. This legislative change addresses the financial barriers that agricultural entities have encountered since the introduction of the tax credit in 2008. The intention behind this bill is to increase the utilization of the tax credit, making it easier for agricultural businesses to establish and maintain operations on important agricultural lands, thus supporting the long-term viability of agriculture in Hawaii.
Despite the beneficial intentions behind SB985, potential areas of contention may arise among stakeholders concerned about the modifications to the tax credit system. Some may argue that removing the cap could lead to unintended consequences, such as a disproportionate allocation of state resources toward agriculture at the expense of other sectors. Additionally, there may be concerns regarding the oversight and effectiveness of how these tax credits are administered and whether they will truly lead to the promised outcomes in sustainability and infrastructure development.