STAND. COM. REP. NO.1223

Honolulu, Hawaii

, 2001

RE: H.B. No. 175

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Economic Development and Technology, to which was referred H.B. No. 175, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this measure is to add tax incentives and amend current tax incentives for the "high technology industry".

Your Committee received testimony in favor or supporting the intent of this measure from the Special Advisor for Technology Development, the Department of Taxation, the Department of Business, Economic Development, and Technology, High Technology Development Corporation, Dwyer, Imanaka, Schraff, Kudo, Meyer & Fujimoto, Building Industry Association – Hawaii, the Hydrogen Renewable Energy Enterprise, LLC, Vertical Wind Turbine Technologies, LLC, Hawaii Island Economic Development Board, Hawaii Venture Capital Association, Chun, Kerr, Dodd, Beaman, & Wong, Oceanit, HawaiiVentures.com, Hawaii Construction Industry Association, Mele Pacific, Inc., CB Bancshares, Inc., City Bank, Square USA, Inc., Hawaii Dredging Construction Company, Maui Economic Development Board, Inc., and Viata Online Inc. Your Committee received written comments on this measure from the Tax Foundation of Hawaii.

Your Committee finds that Hawaii's continued economic growth in the twenty-first century is dependent on how well we use science and technology to increase our productivity and become a major player for technological innovation in the Asia-Pacific region. To remain globally competitive, it is important to continue encouraging our local industries to transform their operations from "old" to "new" economy by integrating technology into all aspects of their businesses' operations.

Your Committee has amended this measure by:

(1) Eliminating the tax credit for net operating losses;

(2) Limiting the technology infrastructure renovation and construction tax credit to renovation, eliminating construction, and carrying over the credit until exhausted rather than refunded to the taxpayer;

(3) Eliminating the tax credit for worthless debts of qualified high technology business;

(4) Providing for a general excise tax exemption for gross income from the construction to technology smart buildings;

(5) Deleting the amendment regarding the operation of the code provision on expenses and interest relating to tax exempt income;

(6) Providing that there shall be no recapture of the capital goods excise tax credit upon disposition of computer hardware and equipment to a non-profit educational institution;

(7) Limiting the recapture of the business investment tax credit to twenty-five per cent;

(8) Deleting the repeal of section 235-111.5; and

(9) Making the Act effective on July 1, 2001.

As affirmed by the record of votes of the members of your Committee on Economic Development and Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 175, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 175, H.D. 2, 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 and Technology,

____________________________

ROD TAM, Chair