STAND

STAND. COM. REP. NO.605-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2570

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 2570, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE CAPITAL GOODS EXCISE TAX CREDIT,"

begs leave to report as follows:

The purpose of this bill is to amend the capital goods excise tax credit by:

(1) Establishing the tax credit as four percent of the cost of eligible depreciable tangible personal property;

(2) Excluding the actual invoice price of the tangible personal property from the definition of "cost";

(3) Deleting references to the county general excise and use tax surcharge;

(4) Including canned computer software in the definition of "eligible depreciable tangible personal property" for taxable years beginning after December 31, 2001; and

(5) Declaring that recapture provisions are not applicable to computer technology or equipment if:

(A) Contributed to a tax exempt section 501(c)(3) organization primarily for purposes of supporting elementary and secondary education;

(B) Contributed to public schools or the University of Hawaii;

(D) The original use of the property is by the donor or the donee;

(E) Substantially all of the use of the property by the donee is for use within Hawaii for educational purposes that are related to the purpose or function of the donee;

(F) The property is not transferred by the donee in exchange for money, other property, or services, except for shipping, installation, and transfer costs; and

(G) The property will fit into the donee's education plan.

The Department of Taxation testified in support of this measure, except for the amendment to the definition of "cost." A concerned individual supported the intent of this measure. The Tax Foundation of Hawaii submitted comments.

Your Committee would like to note that both the Department of Taxation and the Tax Foundation of Hawaii provided excellent suggestions and comments on this measure which should promote further discussion of this matter.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2570, H.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

		____________________________ DWIGHT Y. TAKAMINE, Chair