Hawaii 2025 Regular Session

Hawaii Senate Bill SB651 Compare Versions

Only one version of the bill is available at this time.

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1	1	THE SENATE S.B. NO. 651 THIRTY-THIRD LEGISLATURE, 2025 STATE OF HAWAII A BILL FOR AN ACT RELATING TO TAX EXPENDITURE ACCOUNTABILITY. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	THE SENATE S.B. NO. 651
4	4	THIRTY-THIRD LEGISLATURE, 2025
5	5	STATE OF HAWAII
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7	7	THE SENATE
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9	9	S.B. NO.
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11	11	651
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13	13	THIRTY-THIRD LEGISLATURE, 2025
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17	17	STATE OF HAWAII
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31	31	A BILL FOR AN ACT
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37	37	RELATING TO TAX EXPENDITURE ACCOUNTABILITY.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47	47	SECTION 1. Chapter 231, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows: "§231- Tax expenditures. (a) All laws that enact, modify, or extend the availability of a tax expenditure shall include the following: (1) An explanation of the intent in enacting each tax expenditure, including the expected economic and employment benefit to the State; (2) An analysis of whether the economic or employment benefit to the State provided by the tax expenditure, if any, outweighs its cost; (3) A repeal date that makes the tax expenditure available for no more than thirty-six months; (4) A static revenue estimate of the tax expenditure for each of the fiscal years in the State's financial plan; and (5) For tax expenditures that are modified or extended: (A) The total cost of the tax expenditure over the previous three fiscal years; (B) A static revenue estimate for each of the fiscal years in the State's financial plan if the tax expenditure were repealed; and (C) An analysis describing the extent to which the tax expenditure is fulfilling its desired purpose, including whether the State has realized the anticipated economic benefit and increase in tax revenue. The analysis shall also include the number of jobs created in the State and whether the cost of the tax expenditure is outweighed by its benefits. (b) The director shall adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this section. (c) For the purposes of this section: "State financial plan" refers to the financial plan required under section 37-69. "Static revenue estimate" means a revenue estimate that assumes that the gross domestic product will remain unchanged by the legislative proposal. A "static revenue estimate" may take into account taxpayers' likely behavioral responses to proposed changes in tax law. For the purposes of this definition, "behavioral responses" can be broadly characterized as: (1) Shifts in the timing of transactions and income recognition; (2) Shifts between business sectors and entity form; (3) Shifts in portfolio holdings; (4) Shifts in consumption; and (5) Tax planning and avoidance strategies. "Tax expenditure" means any credit, deduction, exclusion, exemption, or any other tax benefit that provides a preferential rate of tax or deferral of tax liability, authorized under title 14 for the purpose of incentivizing economic activity. The term "tax expenditure" does not include tax measures enacted as a result of conformity with the Internal Revenue Code, nor any modifications to tax measures required by the United States or state constitutions. §231- Lawful disclosure of certain tax expenditure information. (a) Notwithstanding any law to the contrary, for tax expenditures that encourage certain economic activities, the claimant taxpayer's identity and the amount of tax expenditure claimed shall be subject to public disclosure under chapter 92F. The identity of any taxpayer to which a tax expenditure subject to this section flows through shall not be subject to public disclosure. (b) The director shall adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this section, including rules that subject other tax expenditures authorized under this title to this section. (c) For the purpose of this section: "Tax expenditure" has the same meaning as defined in section 231- . "Tax expenditures that encourage certain economic activities" include: (1) Exemption from general excise tax for eligible business activities in an enterprise zone under section 209E-11; (2) Renewable energy technologies income tax credit under section 235-12.5(b)(1)(C), (2)(C), and (3)(C); (3) Motion picture, digital media, and film production income tax credit under section 235-17; (4) Fuel tax credit for commercial fishers under section 235-110.6; (5) Ship repair industry tax credit under section 235‑110.65; (6) Tax credit for research activities under section 235‑110.91; (7) Important agricultural land qualified agricultural cost tax credit under section 235-110.93; (8) Exemption from general excise tax for certain convention, conference, and trade show fees under section 237-16.8; (9) Exemption from general excise tax for services related to ships and aircraft under section 237-24.3(3); (10) Exemption from general excise tax for labor organizations under section 237-24.3(9); (11) Exemption from general excise tax and use tax for aircraft leasing under section 237-24.3(11) and paragraph (6) of the definition of "use" under section 238-1, respectively; (12) Exemption from general excise tax and use tax for aircraft service and maintenance facilities under section 237-24.9 and paragraph (8) of the definition of "use" under section 238-1, respectively; (13) Exemption from general excise tax for ship building and ship repair under section 237-28.1; (14) Exemption from general excise tax for affordable housing projects under sections 237-29 and 238-3(j); and (15) Renewable fuels production tax credit under section 237-110.32." SECTION 2. New statutory material is underscored. SECTION 3. This Act shall take effect upon its approval. INTRODUCED BY: _____________________________
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49	49	SECTION 1. Chapter 231, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
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51	51	"§231- Tax expenditures. (a) All laws that enact, modify, or extend the availability of a tax expenditure shall include the following:
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53	53	(1) An explanation of the intent in enacting each tax expenditure, including the expected economic and employment benefit to the State;
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55	55	(2) An analysis of whether the economic or employment benefit to the State provided by the tax expenditure, if any, outweighs its cost;
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57	57	(3) A repeal date that makes the tax expenditure available for no more than thirty-six months;
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59	59	(4) A static revenue estimate of the tax expenditure for each of the fiscal years in the State's financial plan; and
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61	61	(5) For tax expenditures that are modified or extended:
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63	63	(A) The total cost of the tax expenditure over the previous three fiscal years;
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65	65	(B) A static revenue estimate for each of the fiscal years in the State's financial plan if the tax expenditure were repealed; and
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67	67	(C) An analysis describing the extent to which the tax expenditure is fulfilling its desired purpose, including whether the State has realized the anticipated economic benefit and increase in tax revenue. The analysis shall also include the number of jobs created in the State and whether the cost of the tax expenditure is outweighed by its benefits.
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69	69	(b) The director shall adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this section.
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71	71	(c) For the purposes of this section:
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73	73	"State financial plan" refers to the financial plan required under section 37-69.
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75	75	"Static revenue estimate" means a revenue estimate that assumes that the gross domestic product will remain unchanged by the legislative proposal. A "static revenue estimate" may take into account taxpayers' likely behavioral responses to proposed changes in tax law. For the purposes of this definition, "behavioral responses" can be broadly characterized as:
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77	77	(1) Shifts in the timing of transactions and income recognition;
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79	79	(2) Shifts between business sectors and entity form;
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81	81	(3) Shifts in portfolio holdings;
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83	83	(4) Shifts in consumption; and
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85	85	(5) Tax planning and avoidance strategies.
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87	87	"Tax expenditure" means any credit, deduction, exclusion, exemption, or any other tax benefit that provides a preferential rate of tax or deferral of tax liability, authorized under title 14 for the purpose of incentivizing economic activity. The term "tax expenditure" does not include tax measures enacted as a result of conformity with the Internal Revenue Code, nor any modifications to tax measures required by the United States or state constitutions.
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89	89	§231- Lawful disclosure of certain tax expenditure information. (a) Notwithstanding any law to the contrary, for tax expenditures that encourage certain economic activities, the claimant taxpayer's identity and the amount of tax expenditure claimed shall be subject to public disclosure under chapter 92F. The identity of any taxpayer to which a tax expenditure subject to this section flows through shall not be subject to public disclosure.
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91	91	(b) The director shall adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this section, including rules that subject other tax expenditures authorized under this title to this section.
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93	93	(c) For the purpose of this section:
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95	95	"Tax expenditure" has the same meaning as defined in section 231- .
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97	97	"Tax expenditures that encourage certain economic activities" include:
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99	99	(1) Exemption from general excise tax for eligible business activities in an enterprise zone under section 209E-11;
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101	101	(2) Renewable energy technologies income tax credit under section 235-12.5(b)(1)(C), (2)(C), and (3)(C);
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103	103	(3) Motion picture, digital media, and film production income tax credit under section 235-17;
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105	105	(4) Fuel tax credit for commercial fishers under section 235-110.6;
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107	107	(5) Ship repair industry tax credit under section 235‑110.65;
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109	109	(6) Tax credit for research activities under section 235‑110.91;
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111	111	(7) Important agricultural land qualified agricultural cost tax credit under section 235-110.93;
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113	113	(8) Exemption from general excise tax for certain convention, conference, and trade show fees under section 237-16.8;
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115	115	(9) Exemption from general excise tax for services related to ships and aircraft under section 237-24.3(3);
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117	117	(10) Exemption from general excise tax for labor organizations under section 237-24.3(9);
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119	119	(11) Exemption from general excise tax and use tax for aircraft leasing under section 237-24.3(11) and paragraph (6) of the definition of "use" under section 238-1, respectively;
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121	121	(12) Exemption from general excise tax and use tax for aircraft service and maintenance facilities under section 237-24.9 and paragraph (8) of the definition of "use" under section 238-1, respectively;
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123	123	(13) Exemption from general excise tax for ship building and ship repair under section 237-28.1;
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125	125	(14) Exemption from general excise tax for affordable housing projects under sections 237-29 and 238-3(j); and
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127	127	(15) Renewable fuels production tax credit under section 237-110.32."
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129	129	SECTION 2. New statutory material is underscored.
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131	131	SECTION 3. This Act shall take effect upon its approval.
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135	135	INTRODUCED BY: _____________________________
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137	137	INTRODUCED BY:
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139	139	_____________________________
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145	145	Report Title: Tax Expenditure Accountability; Tax Expenditures; Disclosure Description: Requires laws that enact, modify, or extend the availability of a tax expenditure to contain specific information, revenue estimates, and analyses before becoming law. Allows the disclosure of certain tax credit information. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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153	153	Report Title:
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155	155	Tax Expenditure Accountability; Tax Expenditures; Disclosure
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159	159	Description:
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161	161	Requires laws that enact, modify, or extend the availability of a tax expenditure to contain specific information, revenue estimates, and analyses before becoming law. Allows the disclosure of certain tax credit information.
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169	169	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.