STAND. COM. REP. NO. 983-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 3024
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 Committee on Economic Development and Business Concerns, to which was referred S.B. No. 3024, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO CAPITAL FORMATION,"
begs leave to report as follows:
The purpose of this measure is to assist the high technology industry by establishing a State Private Investment Fund and enhancing several high technology industry tax credits.
Your Committee finds that the fledgling high technology industry's financing needs have outgrown the capabilities of the local market. Even the economic benefits provided under Act 221, Session Laws of Hawaii 2001, cannot provide the necessary capital to take established high tech companies to the next level in the industry. Thus, in order to support continued industry growth and to allow the industry to stay rooted in Hawaii, this bill establishes the state Private Investment Fund. The Fund provides the financing tools necessary to meet the continued needs and objectives of the high technology industry.
The bill also clarifies and enhances other tax incentives developed to assist the high technology industry, including the high technology business investment tax credit, the technology infrastructure renovation tax credit, and the tax credit for research activities.
Your Committee has amended the bill by removing the contents of S.B. No. 3024, S.D.2, and replacing it with H.B. No. 2396, H.D. 2, with several important modifications in the following parts of the bill:
Private Investment Fund
(1) Establishing a separate and autonomous Fund with its own Board of Directors to administer the private investment financing program that is attached to the Hawaii Strategic Development Corporation;
(2) Requiring the disclosure of non-confidential information from persons receiving tax credits; and
(3) Removing the appropriation for the Fund.
Section 235-110.51 Technology Infrastructure Renovation Tax Credit
(1) Deleting the definition for "technology-enabled infrastructure" for purposes of furthering discussion.
Section 235-110.9 High Technology Business Investment Tax Credit
(1) Adding a definition of "investment tax credit allocation ratio" for purposes of clarity; and
(2) Reassuring taxpayers with Department of Taxation "comfort" rulings that they can depend on such rulings despite changes to the law.
Section 235-110.91 Tax Credit for Research Activities
(1) Adding definitions of "corporate" and "qualified high technology business" for purposes of clarity and consistency;
(2) Generally, changing the reporting requirements, but not requiring any non-confidential information from qualified high technology businesses; and
(3) Requiring the disclosure of the identities of corporate investors and qualifying corporations under the proposed Hawaii business-research institutes tax credit, applicable to the entire bill and Act 221, Session Laws of Hawaii 2001;
(1) Adding a tax credit for Hawaii business-research institutes;
(2) Requiring Act 221 to be "neutrally" construed;
(3) Clarifying the intent of the Legislature in interpreting Act 221 and tightening eligibility requirements;
(4) Changing all dollar amounts, percentages, ratios, and dates to "blanks";
(5) Adding eight full-time auditor positions for the Department of Taxation to establish a "Corporate Investigation Team"; and
(6) Adding a limitation of liability provision to protect the State with respect to tax credits.
As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3024, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3024, S.D. 2, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,
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____________________________ BRIAN SCHATZ, Chair |
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