STAND. COM. REP. NO. 1317

Honolulu, Hawaii

RE:    H.B. No. 1631

       H.D. 2

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Economic Development and Taxation, to which was referred H.B. No. 1631, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO HIGH TECHNOLOGY BUSINESS INVESTMENT TAX CREDIT,"

begs leave to report as follows:

     The purpose of this measure is to require qualified high technology businesses claiming the High Technology Business Investment or Research Tax Credit to file with the Department of Taxation an annual survey about employment positions in the State.

     Testimony in support of this measure was received from the Department of Business, Economic Development, and Tourism.  The Department of Taxation, Hawaii Science & Technology Council, Hawaii Aquaculture Association, Novasol, PacifiCap Group, and one individual submitted testimony in opposition.  Enterprise Honolulu and the Tax Foundation of Hawaii submitted comments on this measure.

     Your Committee previously heard and approved S.B. No. 898, S.D. 1, which is also a reporting measure.

     Given the concerns expressed regarding this measure, your Committee has amended H.B. No. 1631, H.D. 2, by deleting its contents and inserting the language from S.B. No. 898, S.D. 1.  As amended, this bill:

     (1)  Requires the Department of Taxation to report annually on information collected from July 1, 2004, and thereafter on qualified high technology businesses and related tax incentives to properly evaluate their effectiveness; and

     (2)  Appropriates unspecified amounts for the Department of Taxation to initiate and begin implementation.

     As affirmed by the record of votes of the members of your Committee on Economic Development and Taxation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1631, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1631, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development and Taxation,

____________________________

CAROL FUKUNAGA, Chair