Mar. 28—State lawmakers have once again taken a pass at trying to abolish a tax break for real estate investment trusts operating in
Two bills introduced in January that would impose the state's corporate income tax on REITs, which own some of the most profitable commercial real estate in
Instead, a bill that would mandate REITs disclose their presence in
Past efforts to tax REITs in
REIT tax bills in recent years have in some cases made it deep into legislative sessions, but died for various reasons that in 2017 included a move by Sen.
Baker, a Democrat who represents West and
In 2019, lawmakers passed a REIT tax bill, but Gov.
Last year, a REIT tax bill cleared the full
This year, REIT tax measures failed to receive an initial hearing in the
Quinlan said there is some hesitancy this year to pass a REIT tax bill over concerns that such a change could negatively affect REIT spending on construction projects that represent a bright spot in a local economy hobbled by COVID-19 impacts on tourism and other business operations.
Also, conflicting estimates persist on how much additional tax revenue a REIT tax bill would generate.
Quinlan said a pending REIT information disclosure bill should hopefully clarify the impact a tax change would have, and he expects the effort to tax REITs could resume after this year depending on what any new disclosures show.
"I definitely don't think it's a lost cause, " he said.
"As a strong supporter of taxing REITs, I am committed to doing all I can to move these measures forward during next year's legislative session, " she said in an email. "Taxing REITs must be part of our strategy for sustaining our state's fiscal recovery and creating an economy that advances the prosperity of all of
REITs were created by
The unique business structure requires that REITs distribute at least 90 % of their income to shareholders. So it is these shareholders who pay nearly all the income tax on REIT profits.
A disparity with this arrangement exists in
State officials in 2018 identified at least 70 REITs operating in
REIT-owned properties include shopping complexes (Ala Moana Center, Pearlridge Center,
Local REIT A &B owns 36 properties with a combined 3.9 million square feet of retail, office and industrial space.
Estimates on how much income tax REITs avoid paying in
The lower figures are from state agencies, and the higher estimates are touted by REIT tax proponents that include the
Additionally, Nareit, a national REIT trade association that opened a
"The bill is not a revenue producing bill, " Nareit said in written testimony on last year's bill.
Quinlan said one bill advancing this year aimed at collecting more useful tax contribution information—House Bill 286—hopefully will help clarify the issue.
"Right now the two sides are so far apart, " he said.
HB 286 passed the full house and an initial
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