STAND. COM. REP. NO. 2485

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2948
                                        S.D. 1




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

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2948, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HIGH TECHNOLOGY,"

begs leave to report as follows:

     The purpose of this measure is to enhance the tax benefits
of Act 178, Session Laws of Hawaii 1999 (SLH), to:

     (1)  Include certain performing arts products in the
          definition of "computer data";

     (2)  Expand the exclusion from income of royalty and other
          income derived from patents and copyrights to include
          income derived from trade secrets;

     (3)  Allow partnership investors the flexibility of
          allocating the high technology business investment tax
          credit among partners without regard to federal income
          tax allocation rules; and

     (4)  Increase the state tax credit for research and
          development from 2.5 percent to twenty percent to match
          the federal rate.

     Your Committee finds that this measure will further
strengthen high technology business incentives approved in 1999,
and that the proposed changes are in response to industry
recommendations to enhance those incentives.  Your Committee is

 
a                                                     SB2948 SD1
                                                      
                                   STAND. COM. REP. NO. 2485
                                   Page 2


particularly interested in the opportunities that the measure is
intended to provide to the entertainment industry in Hawaii.  

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B.
No. 2948, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
a                                                     SB2948 SD1