New laws on insurance and taxes to take effect

The Legislature aims to help low wage earners and owners of condominiums

Starting tomorrow, the lowest wage earners in the state can start claiming tax credits of up to $160 under the first of two tax cuts approved by the Legislature earlier this year.

The new year also will see the return of health insurance rate regulation among laws that take effect tomorrow.

Another tax benefit starting in 2008 is a 100 percent capital gains income tax exemption from the sale of a leased-to-fee interest in condominium units to an association of apartment owners.

The tax credit refund was among two tax cuts adopted by the Legislature this year under a constitutional mandate that says some form of refund or credit is required when tax collections show 5 percent growth in two consecutive fiscal years.

Together the two tax cuts totaled about $49 million.

The tax credit refund, Act 210, is on a sliding scale ranging from $160 for those filing a joint return with an adjusted income of less than $5,000 to $90 for those with joint incomes between $50,000 and $60,000. Single taxpayers making less than $5,000 would get $140, tapering off to $70 at higher income levels.

There is no tax credit for those with an adjusted income of more than $60,000, whether filing a joint or single return.

A separate food excise tax credit, Act 211, also was passed by lawmakers this year, but cannot be claimed until 2008 taxes are filed.

Both measures "more accurately reflect current needs and incomes of those who are struggling to pay for necessities," the Legislature said in adopting the measures.

Gov. Linda Lingle, who had proposed $346 million in tax cuts over two years, had criticized the Legislature for not placing a higher priority on easing the tax burden on residents.

The Legislature in 2008 will be under the same constitutional requirement to provide tax cuts because of recent general fund growth, but lawmakers and Lingle say it is too early to tell what form those proposals might take.

The tax exemption on sales of condominiums, Act 166, would begin next year and expire on Dec. 31, 2012.

It exempts from state income taxation all of the capital gains realized from a sale of the leased-to-fee interest in condominium units to an association of apartment owners or residential cooperative corporations.

Senate lawmakers, in their committee report, said they believed the measure "would provide residential lessees with an opportunity to be fee-simple homeowners in an increasingly expensive and competitive housing market."

Meanwhile, Act 175 permanently restores health insurance rate regulation that expired after 2006.

It restores the previous law that prohibits health insurance rates that are excessive, inadequate or unfairly discriminatory, and gives the state insurance commissioner final approval power.

The new law does not expire and also requires the commissioner to decide on rate submissions in a more timely manner.

Laws will affect traffic and prescription drugs

A look at some of the new laws that take effect tomorrow. In some cases, laws might have taken effect already, with a certain section of the legislation commencing tomorrow.

» Act 85, Relating to Traffic Infractions: Expands scope of traffic infractions law to include infractions committed by minors. Makes technical changes to clarify and expedite the processing of traffic violations, including collection of traffic fines from visitors for moving violations or parking citations.

» Act 92, Relating to Prescription Drugs: Provides equal access to immunosuppressant medication for Medicaid patients who have HIV, AIDS or hepatitis C, or who require immunosuppressant medication due to transplants, regardless of whether they are in the Medicaid Fee-for-Service or QUEST programs.

» Act 108, Relating to Domestic Abuse: Codifies existing procedures defining the responsibilities of the Department of Human Services and the Family Court when the court refers an allegation of domestic abuse to the agency for investigation.

» Act 110: Temporarily raises the maximum weekly unemployment benefit to 75 percent of the average weekly wage. Changes Adequate Reserve Fund amount to reflect the temporary increase in unemployment benefits. Expires 2010.

» Act 166, Relating to Leasehold Conversion: Creates a temporary 100 percent capital gains income tax exemption from the sale of a leased-to-fee interest in condominium units to an association of the apartment owners. Expires in five years.

» Act 175, Relating to Health Insurance Rate Regulation: Reinstates the ability of the state insurance commissioner to regulate health insurance rates.

» Act 211, Relating to Taxation: Provides a refundable food/excise tax credit for taxpayers with adjusted gross income under $50,000.

» Act 212, Relating to Native Hawaiians: Establishes an advisory committee to recommend creation of an 'aha moku council to utilize Hawaiian practices for state resource management.