Tax credit for flood losses considered
Homeowners throughout the state who suffered property damage or had to relocate because of the recent deluge of rain and flooding would be able to recoup up to 10 percent of their expenses in the form of a tax credit, under a bill advancing in the Legislature.
Residents and small-business owners who do not qualify for other forms of aid would be able to claim the one-time, nonrefundable tax credit up to $10,000 for costs stemming from repairs, insurance, rental and other expenses.
The proposal originally was aimed at helping victims of the 2004 Manoa floods, but was expanded to include victims of the most recent flooding on all islands.
Lawmakers who represent Manoa, Sen. Brian Taniguchi and Rep. Kirk Caldwell, were unsuccessful in getting the tax credits approved specifically for their district last year. They said recent heavy rains -- more than 40 days since February -- helped convince colleagues of the need to provide more help to more residents.
"When it was just the Manoa flooding, we tried to communicate to people that there were some serious concerns," said Taniguchi (D, Moiliili-Manoa), chairman of the Senate Ways and Means Committee. "Now that the Windward side, Kauai, Maui -- other areas of the state -- have experienced some of that, I think they realize now that it is something that my colleagues kind of need to deal with."
Expansion of the credits also was supported by Gov. Linda Lingle, who instructed state Tax Director Kurt Kawafuchi to propose the amendments, some of which the committee plans to incorporate in the amended bill. Kawafuchi said the credits would cost about $9.5 million.
Some lawmakers suggested expanding the time element of the bill to include some disasters before 2004. Those changes could still be included as the bill undergoes further crafting in joint House-Senate conference committee.
"I think this is one proposal that we'll look at, given the 40 days and 40 nights of rain and the damage to businesses and residences," said House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho).
Caldwell said he worried that the inclusion of too many events could spell doom for any proposed tax credits, adding that he expects colleagues to examine all aid that is financially possible.
"There has to be cutoff somewhere," said Caldwell (D, Manoa). "If you expand it too broadly, the fiscal impact will be so dramatic that it will die.
"So many people have been impacted in the recent past, in the present, that we're stepping up and addressing that problem."
Critics of the proposal included Lowell Kalapa of the Tax Foundation of Hawaii, a policy analysis group.
"We have programs that are designed to help people recover from their disaster losses," Kalapa said. "The tax system is not an efficient means of handing out that money, nor is it a way to ensure that money is being used wisely."
