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Senate committees pass renewable fuels production tax credit with DOTAX-driven amendments
Summary
SB 2376, which establishes a renewable fuels production tax credit, passed committee after the Department of Taxation won amendments adding definitions for qualifying costs, separate-site production, a prohibition on double-claiming credits, and a delayed taxable-year start. Supporters say the credit will spur local investment; critics warned about fiscal scale and certification needs.
The joint Senate hearing advanced SB 2376, a measure to create a renewable fuels production tax credit intended to stimulate local production of renewable fuels and broaden Hawaii’s economy.
Industry witnesses including Pacific Biodiesel and the Hawaii Renewable Fuels Coalition urged passage, saying the credit would encourage investment, support agriculture, and create local fuel production. "This bill updates the renewable fuel production tax credit to give businesses clarity and confidence to invest in Hawaii," Council Member Augutoba said in support testimony.
The Department of Taxation asked for technical changes to define a qualifying renewable-fuel production cost and to ensure separate credited productions are at distinct physical sites. DOTAX also recommended language preventing a producer from claiming multiple overlapping renewable-fuel credits. Committee sponsors adopted four DOTAX-suggested amendments, including defining qualifying costs, requiring separate physical sites for multiple credits, prohibiting double claims, and making the credit available for taxable years beginning after Dec. 31, 2026.
Opponents urged safeguards and fiscal scrutiny. Theodore Melchros warned the program could be expensive if applied to large fuel volumes and recommended a nonrefundable credit and DOTAX certification to prevent improper claims. DOTAX staff said they had drafted language for cost definitions and offered standard anti-duplication language.
After the amendments, the committees voted to pass SB 2376 with amendments. Sponsors said the changes respond to DOTAX concerns and aim to target the credit while minimizing fiscal exposure.
