STAND. COM. REP. NO. 2173

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2482
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred S.B. No. 2482 entitled: 

     "A BILL FOR AN ACT RELATING TO TECHNOLOGY BUSINESS
     TAXATION,"

begs leave to report as follows:

     The purposes of this measure are to:

     (1)  Allow biotechnology companies to sell their unused net
          operating loss carryover and unused tax credits to
          other qualified biotechnology companies; and

     (2)  Extend the capital loss carryforward to fifteen years
          for biotechnology companies.

     Testimony in favor of this measure was submitted by the
Department of Business, Economic Development, and Tourism and the
Department of Taxation.  The Tax Foundation of Hawaii submitted
comments.

     Your Committee finds that this measure would encourage the
biotechnology industry in Hawaii, and is in line with
recommendations from the industry, which are outlined in a
December, 1999, report entitled "Biotechnology in Hawaii: A
Blueprint for Growth."  Biotechnology companies in Hawaii, unlike
other high technology companies, depend on the natural resources
and assets found in the islands, and if successful, are likely to
remain in Hawaii.

 
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     Your Committee has heard that this measure is based on a
successful New Jersey law and believes that Hawaii's fledgling
biotechnology industry would benefit from similar provisions.
Your Committee has amended this measure:

     (1)  To add a definition of "tax credits" to distinguish the
          credits in this measure from numerous others in Chapter
          235, Hawaii Revised Statutes (HRS);

     (2)  For the purposes of clarity and to track more closely
          the language in other sections in chapter 235, HRS,
          with regards to tax credits; and

     (3)  For the purposes of style.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 2482, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2482,
S.D. 1, and be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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