Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 425, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to establish a Hawaii instrument pool into which individuals and companies may donate usage of their high technology instruments.

This measure also provides a tax credit for donation of high technology instruments, as designated by the High Technology Development Corporation, to the Hawaii instrument pool. The taxpayer must commit to donating the instrument for at least four months of its use per year for each of five consecutive twelve-month periods, following the date of the initial donation.

Your Committee finds that instrument pooling involves owners pooling their equipment and instruments and allowing other entities to use them when they are not otherwise in use and under specified conditions. This allows entities to have access to instruments and equipment that they lacked the capacity to purchase on their own, and has proven effective in fostering collaboration, facilitating research and development, and creating new economic opportunities.

Your Committee further finds that establishing an instrument pool will particularly benefit a number of small, start-up technology companies in Hawaii, in such areas as electronics, biotechnology, and software, that face difficulty acquiring or gaining access to specialized instruments. These specialized instruments are very costly, rare, or only used occasionally so that purchasing is impractical. Your Committee notes that access to these instruments is often the only barrier for a small company to enter into new industries, diversify its products and services, and rise to the next level of success.

Your Committee finds that this measure will provide an attractive incentive for companies to make their specialized technology instruments available on loan for smaller companies to use and, consequently, will assist Hawaii's high technology companies to enter into new and emerging technology industries.

Upon further consideration, your Committee finds that this measure raises the potential for a double tax credit, as the tax credit created by this measure could be taken in addition to the capital goods excise tax credit under section 235-110.7 or the high technology business investment tax credit under section 235-110.9.

Accordingly, your Committee has amended this measure by:

1. Eliminating the potential double tax credit by providing that if a tax credit for a qualifying instrument is claimed under the provision created by this measure, no tax credit shall be claimed under section 235-110.7 or 235-110.9; and
2. By making technical changes for the purpose of clarity and consistency.

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 S.B. No. 425, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 425, S.D. 2.