If enacted, SB1117 will amend Chapter 235 of the Hawaii Revised Statutes, thereby instituting a more structured approach to the evaluation of tax credits. The introduction of sunset provisions or reductions aims to create a system where tax credits are regularly assessed, potentially leading to more sustainable fiscal policies. By limiting the duration or amount of tax credits, the state may reduce long-term budgetary impacts and improve the transparency of tax expenditures.
Senate Bill 1117 proposes changes to the administration of income tax credits in Hawaii. The bill primarily aims to implement a five-year sunset provision on newly established or renewed income tax credits beginning after December 31, 2023. Alternatively, it provides for a gradual reduction of the allotted credit over a three-year period starting with the sixth year of the credit. These changes are intended to enhance fiscal responsibility in the tax system by ensuring that tax credits do not remain perpetually available without review or reduction over time.
Discussions surrounding SB1117 have highlighted concerns regarding the implications for various stakeholders who rely on these tax credits, such as businesses and individuals benefitting from financial assistance through tax incentives. Some opponents may argue that while fiscal responsibility is important, the limits imposed by the bill could hinder economic growth and discourage investments. Proponents, on the other hand, suggest that the bill is crucial for maintaining a balanced budget and ensuring that tax credits serve their intended purpose without unnecessary long-term fiscal commitments.