STAND. COM. REP. NO.508
Honolulu, Hawaii
, 2003
RE: S.B. No. 359
S.D. 1
Honorable Robert Bunda
President of the Senate
Twenty-Second State Legislature
Regular Session of 2003
State of Hawaii
Sir:
Your Committees on Economic Development and Science, Arts, and Technology, to which was referred S.B. No. 359 entitled:
"A BILL FOR AN ACT RELATING TO FILM INDUSTRY,"
beg leave to report as follows:
The purpose of this measure is to expand the motion picture and television film production tax credit to:
(1) Increase the tax credit by an unspecified percentage of the first $25,000 of each employee's wages and salaries;
(2) Exclude those wages and salaries from production costs; and
(3) Apply the tax credit to commercials that advertise products and services.
Your Committees received testimony in support of this measure from the County of Hawaii, Hawaii Media Inc., Film & Video Association of Hawaii, Makua Pictures, The Reel Studio, Hawaii-TV, Screen Actors Guild, Honolulu Film Office, Pacific Focus, Inc., and Hawaii Media Inc. The Tax Foundation of Hawaii submitted comments regarding this measure. The Department of Business, Economic Development and Tourism (DBEDT) and the Department of Taxation submitted comments.
Your Committees find that since 1997, the State has offered a 4% refundable tax credit to all motion picture and television producers on all Hawaii production expenditures. The credit covers the cost of goods and services, as well as wages and salaries, while filming in the State.
Your Committees find that while this tax credit has provided a sound incentive for motion picture and television film producers to film in the State, generating over $125 million in film related expenditures in 2000, Hawaii's tax credits are less competitive in comparison with other jurisdictions.
Therefore, your Committees support the intent of this measure, to broaden the tax credit in order to expand production opportunities within the State.
Your Committees have amended this measure by:
(1) Setting the credit percentage for wages and salaries at 15% of the first $25,000 of the cost of wages and salaries paid to each employee, and applying the credit to wages and salaries incurred after June 30, 2003;
(2) Detailing in the measure's legislative findings, the efforts of other states that offer comparable 15% rebates;
(3) Inserting a section to require the DBEDT Film Board to convene a work group to determine the best means of providing incentives to expand the acquisition, use, and local availability of television and movie production equipment in the State and to report to the Legislature prior to the 2004 Regular Session;
(4) Disqualifying taxpayers using the motion picture and television film production tax credit from claiming a tax credit under Act 221, Session Laws of Hawaii 2001, the High Technology tax credit; and
(5) Applying the measure to taxable years beginning after December 31, 2002.
With these amendments, your Committees believe this measure strikes an appropriate balance between the need to provide incentives to expand media production in Hawaii, and the State's interest in collecting an appropriate level of revenue from these businesses.
As affirmed by the records of votes of the members of your Committees on Economic Development and Science, Arts, and Technology that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 359, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 359, S.D. 1, and be referred to the Committee on Ways and Means.
Respectfully submitted on behalf of the members of the Committees on Economic Development and Science, Arts, and Technology,
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____________________________ DAVID Y. IGE, Chair |
____________________________ CAROL FUKUNAGA, Chair |
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