STAND. COM. REP. NO. 967-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 2558
S.D. 2
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Sir:
Your Committees on Economic Development and Business Concerns and Tourism and Culture, to which was referred S.B. No. 2558, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO THE ENTERTAINMENT INDUSTRY,"
beg leave to report as follows:
The purpose of this bill is to provide incentives to attract film, video, and sound recording production companies to the state by:
(1) Expanding the provisions for the motion picture and film production income tax credit (production tax credit) to include digital media and sound recording productions;
(2) Increasing the current production tax credit from four percent to 15 percent of costs incurred on Oahu and 20 percent of costs incurred on the Neighbor Islands;
(3) Clarifying the requirements a production must have to qualify for the production tax credit, such as a minimum amount of expenditure and a minimum percentage of labor hired from within the State of Hawaii;
(4) Requiring qualifying taxpayers to submit to the Department of Business, Economic Development, and Tourism (DBEDT) a report detailing the costs incurred and tax credit claimed, after which DBEDT will issue a certificate of verification; and
(5) Establishing requirements that must be met by businesses producing performing arts products that are claiming the High Technology Business Investment Tax Credit.
The Department of Business, Economic Development, and Tourism, Film Commission of the Office of Economic Development of the County of Kauai, Sprite Entertainment, Big Island Film Office of the Department of Research and Development of the County of Hawaii, and Hawaii Film Authority, Inc., submitted testimony in support of this measure. The Screen Actors Guild Hawaii Branch, the International Alliance of Theatrical and State Employees, Local 665, the American Federation of Musicians, Local 667, and a concerned individual supported this measure with amendments. The Department of Taxation, Honolulu Film Office, and two concerned individuals supported the intent of this measure. Two concerned individuals supported the intent of this measure with amendments. The Office of Information Practices, Tax Foundation of Hawaii, and TalkStory Productions offered comments.
Your Committees note that concerns have been raised that the definition of a "qualified taxpayer" for purposes of this tax credit may be overly broad.
Your Committees also respectfully request the Department of Taxation and Department of Business, Economic Development, and Tourism to work with your Committee on Finance to ensure that the language in this bill does not include activities that are already occurring locally, in particular, print and advertising agencies.
Your Committee has amended this bill by:
(1) Removing all numbers and amounts relating to:
(a) Amounts and percentages of production costs;
(b) Population of the counties in which production activity takes place;
(c) Certain numbers and percentages of local hires and jobs created;
(d) The percentage of production activity that must take place within the state; and
(e) Dates to give your Committee on Finance maximum flexibility to determine appropriate thresholds to qualify for the tax credit; and
(2) Making technical, nonsubstantive amendments for clarity, consistency, and style.
As affirmed by the records of votes of the members of your Committees on Economic Development and Business Concerns and Tourism and Culture that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2558, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2558, S.D. 2, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committees on Economic Development and Business Concerns and Tourism and Culture,
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____________________________ JERRY L. CHANG, Chair |
____________________________ BRIAN SCHATZ, Chair |
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