STAND. COM. REP. NO.3048
Honolulu, Hawaii
, 2002
RE: H.B. No. 2576
H.D. 1
S.D. 1
Honorable Robert Bunda
President of the Senate
Twenty-First State Legislature
Regular Session of 2002
State of Hawaii
Sir:
Your Committee on Economic Development and Technology, to which was referred H.B. No. 2576, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO HIGH TECHNOLOGY TAX INCENTIVES,"
begs leave to report as follows:
The purpose of this measure is to clarify the application of certain high technology tax incentives, by:
(1) Amending the definition of "performing arts products" as it relates to commercial television and film products for sale or license to require at least 50% of the postproduction work be performed in Hawaii;
(2) Adding a definition of "postproduction work";
(3) Amending the definition of "qualified research" as it relates to computer software to mean "the development and design of unique and specific code to create computer software applications and design databases for sale or license"; and
(4) Providing for the recapture of the high technology business investment tax credit if a business is transferred and, if the credit is claimed, precluding other state income tax credits for the same investment.
Your Committee received testimony in support of this measure from the Executive Assistant to the Governor and Special Advisor for Technology Development, the Department of Taxation, Kauai County Office of Economic Development, Hoana Technologies, Oceanit, Pacific Focus Inc., Hawaii Technology Trade Association, Worldwide Energy Group, Inc., and High Technology Development Corporation. The Tax Foundation of Hawaii submitted comments.
Your Committee finds that Act 178, Session Laws of Hawaii 1999, and Act 297, Session Laws of Hawaii 2000, established various tax incentives to encourage the development of high technology businesses in the State. These acts provided investment and research credits as well as income exclusions providing tax relief to high tech businesses and individuals associated with high tech businesses. This measure refines these incentives in an effort to make them more understandable and useable.
Your Committee has amended this measure in the following ways:
(1) Eliminating the requirement that at least 50% postproduction work to be performed in Hawaii and replacing it with other activities that will support the growth and development of Hawaii's film industry;
(2) Amending section 206M-3(a) to include the acceptance and expenditure of gifts, grants, or funds from various federal agencies;
(3) Including definitions of "nonfossil fuel energy" and "nonfossil fuel energy-related technology";
(4) Adding an appropriation for marketing the high technology tax incentives;
(5) Amending the effective date to July 1, 2050, to promote further discussion and development of this measure; and
(6) Making technical, nonsubstantive changes for purposes of clarity, conformity, and style.
Your Committee notes that the amendments suggested by the Executive Assistant to the Governor and Special Advisor for Technology Development were not adopted because the Executive Assistant/Special Advisor's written testimony was unclear and the Executive Assistant/Special Advisor was not present to answer your Committee's questions to clarify the amendments.
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. 2576, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2576, H.D. 1, 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,
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____________________________ ROD TAM, Chair |
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