House panel OKs
credits for new jobs

Businesses that increase jobs
by 10% could get a $5,000 tax
break for each new employee

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By B.J. Reyes
Associated Press

Businesses that increase jobs by 10 percent over two years would be eligible for a tax credit of $5,000 for each new worker under a bill moving through the Legislature and touted by House Democrats as the primary initiative of their legislative package this session.

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To qualify for the credit, new jobs would have to pay at least $25,000 a year and be in place for two years. The bill also requires that two-thirds of the $5,000 credit be used by employers to establish work force training programs.

The House Committee on Economic Development and Business Concerns approved the measure 11-0 with three members absent. It now goes to the House Finance Committee.

"It's critical that we start to build up our work force," said Committee Chairman Brian Schatz, D-Tantalus-Makiki. "While we want to provide some relief from the tax burden to small businesses and large businesses, we also want to build up our work force so that when there is an opening we don't have to look outside the state of Hawaii to hire people.

"We should have local people who are prepared for the global economy."

The bill originally proposed a credit of no more than $1,500 per worker and required that employers create jobs paying $39,000 a year, or three times the state's minimum wage, for three years.

Schatz said the requirements were reduced after talking with business representatives who said such standards were too high.

The increased credit allows for the savings to be reinvested in work force training programs.

"As we move this legislation along we'll probably begin to clarify what kind of work force training programs would be applicable," Schatz said.

Gov. Linda Lingle has taken no position on the bill, instead promoting her idea of raising the standard deduction for income tax filing as the best form of tax relief for Hawaii residents.