Relating To Tax Expenditure Accountability.
SB651 would impose new accountability requirements on Hawaii tax expenditures—meaning tax credits, deductions, exclusions, exemptions, and other preferential tax benefits used to incentivize economic activity. Under the bill, any law creating, modifying, or extending a tax expenditure would need to include a statement of purpose, an analysis of expected economic and employment benefits, an assessment of whether those benefits outweigh the cost, a repeal date no longer than 36 months, and static revenue estimates for the state financial plan. For tax expenditures that are modified or extended, the bill would also require reporting on prior-year costs, repeal scenarios, job creation, and whether the tax benefit is meeting its intended purpose.
The bill also creates a disclosure framework for certain tax expenditures that encourage economic activity. For a listed set of credits and exemptions, the claimant taxpayer’s identity and the amount claimed would be subject to public disclosure under Hawaii’s public records law, while pass-through recipients would remain protected. The Department of Taxation director would be required to adopt rules to implement both the accountability and disclosure provisions.
SB651 would amend chapter 231 of the Hawaii Revised Statutes by adding new statutory requirements governing the enactment, extension, and modification of tax expenditures. It would affect future tax legislation by conditioning it on specified fiscal analyses and sunset provisions, and it would require additional reporting and rulemaking by the Department of Taxation. The bill would also affect taxpayers claiming certain enumerated tax incentives—such as enterprise zone benefits, renewable energy credits, film credits, ship repair credits, research credits, affordable housing-related exemptions, and others—by making some claim information publicly disclosable.
The bill’s framing suggests a generally reform-oriented and oversight-focused approach, with an emphasis on transparency, fiscal discipline, and measuring whether tax incentives actually produce economic returns. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of support or opposition from hearings or floor action. Based on the text alone, the measure appears designed to appeal to proponents of government accountability and critics of open-ended tax incentives.
The main points of contention are likely to be the bill’s new disclosure requirements and its stricter procedural hurdles for tax incentives. Supporters would likely favor the added transparency, sunset dates, and cost-benefit analysis requirements as tools to evaluate whether tax expenditures are effective. Opponents may argue that public disclosure of claimant identities and claimed amounts could discourage participation, raise privacy or competitiveness concerns, and make it harder to use tax incentives to attract investment or support targeted industries. The 36-month repeal-date limit and the requirement for static revenue estimates may also be viewed as burdensome by agencies or stakeholders who prefer longer-term or more flexible incentive structures.