CONFERENCE COMMITTEE REP. NO.107
Honolulu, Hawaii
, 2001
RE: H.B. No. 175
H.D. 2
S.D. 2
C.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-First State Legislature
Regular Session of 2001
State of Hawaii
Honorable Robert Bunda
President of the Senate
Twenty-First State Legislature
Regular Session of 2001
State of Hawaii
Sir:
Your Committee on Conference on the disagreeing vote of the House of Representatives to the amendments proposed by the Senate in H.B. No. 175, H.D. 2, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO TAXATION,"
having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.
The purpose of this measure is to improve the application of the tax laws to high technology activities by amending current tax laws and providing new incentives.
Your Committee on Conference finds that this is the third in Hawaii's efforts to provide tax relief to high technology activities to encourage the growth of this industry. Your Committee on Conference has amended this bill by deleting:
(1) The general excise tax exemptions for Internet service providers and for qualified high technology office buildings;
(2) The public service company tax exemption for the provision of Internet access;
(3) The tax credits for research activities and worthless debts of qualified high technology businesses (QHTB) for financial institutions;
(4) The allowance of the capital goods excise tax credit and tax credit for research activities for insurance companies;
(5) The amendments to the capital goods excise tax credit; and
(6) The amendment to allow a research tax credit for QHTBs involved in performing arts products, biotechnology, computer software design, sensor and optic technologies, ocean sciences, astronomy, or non-fossil fuel energy-related technology.
Your Committee on Conference has further amended the bill by:
(1) Adding a general excise and public service company tax exemption for certain activities of public Internet data centers;
(2) Adding an exemption from the general excise tax for the income derived from the sale of net operating losses;
(3) Clarifying the income tax treatment of losses related to stock options or warrants and expenses relating to tax exempt income with regard to expenses for royalties and other related income;
(4) Clarifying the income tax treatment of allocations of net operating loss sales;
(5) Lowering the maximum allowed credit for high technology investments by approximately 3/5 for each year of investment;
(6) Expanding the application of the high technology business investment tax credit and by changing the recapture amount from the amount of the tax credit taken in the previous two years to ten per cent of the credit claimed for the preceding two years if a qualified high technology business goes out of business or the investor either sells or withdraws from the qualified high technology business;
(7) Shortening the time period for application of the research tax credit from ten years to five years;
(8) Clarifying the law regarding the sale of net operating losses (NOL) by:
(a) Defining the surrendered tax benefit as the tax liability saved if the NOL carryforward could have been used by the QHTB and providing that it be computed at the corporate income tax rate; and
(b) Defining a QHTB for the sale of NOLs as it is defined for the royalty income tax exclusion;
and
(9) Making technical, nonsubstantive amendments to the purposes of clarity.
As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of H.B. No. 175, H.D. 2, S.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as H.B. No. 175, H.D. 2, S.D. 2, C.D. 1.
Respectfully submitted on behalf of the managers:
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ON THE PART OF THE SENATE |
ON THE PART OF THE HOUSE |
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____________________________ ROD TAM, Chair |
____________________________ LEI AHU ISA, Co-Chair |
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____________________________ BRIAN T. TANIGUCHI, Co-Chair |
____________________________ NATHAN SUZUKI, Co-Chair |