STAND. COM. REP. NO.3307

Honolulu, Hawaii

, 2002

RE: H.B. No. 2576

H.D. 1

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 2576, H.D. 1, S.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 encourage the use of high technology business investment tax incentives.

Specifically, the measure clarifies the application of certain high technology business investment 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 that marketing opportunities and activities that support the growth and development of Hawaii's film industry were provided in the development of the product;

(2) 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

(3) Including definitions of "nonfossil fuel energy" and "nonfossil fuel energy-related technology";

(4) Providing for the recapture of the high technology business investment tax credit if a business has a taxable transfer and, if the credit is claimed, precluding other state income tax credits for the same investment;

(5) Clarifying how partnerships, limited liability partnerships, limited liability companies classified as partnerships, and S-corporations may claim the tax credit;

(6) Adding a new section to Chapter 206M, Hawaii Revised Statutes, relating to high technology development, that enables the High Technology Development Corporation to utilize federal funds for high technology-related projects;

(7) Amending section 206M-3(a), Hawaii Revised Statutes, to enable the High Technology Development Corporation to accept and expend gifts, grants, or funds from various federal agencies; and

(8) Appropriating funds for marketing high technology tax incentives.

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 the measure by deleting the $1 appropriated for marketing tax incentives and by changing the effective date of the measure from July 1, 2050, to July 1, 2040.

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 H.B. No. 2576, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2576, H.D. 1, S.D. 2.

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

____________________________

BRIAN T. TANIGUCHI, Chair