STAND. COM. REP. NO. 976

Honolulu, Hawaii

RE:    H.B. No. 1642

       H.D. 2

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Economic Development and Technology, to which was referred H.B. No. 1642, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO HIGH TECHNOLOGY,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Extends the income tax credit for qualified research activities for five years;

     (2)  Place an annual aggregate cap on the tax credit; and

     (3)  Require the Department of Taxation to collect data on the income tax credit for qualified research activities, including the amount of tax credits claimed and the financial impact of the tax credit.

     Your Committee received testimony in support of this measure from the High Technology Development Corporation; Hawaii Strategic Development Corporation; Hawaii Dual Use Network; Puko‘a Scientific; Oceanit; Cardax Pharmaceuticals, Inc.; Referentia Systems Incorporated; Navatek; H2 Technologies, Inc.; and TeraSys Technologies.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee previously heard and amended S.B. No. 753, which contained comparable provisions, and has amended this measure by deleting its contents and replacing them with the language in S.B. No. 753, S.D. 2.  As amended, this measure:

     (1)  Requires a qualified high technology business that claims the tax credit for qualified research activities to file annual survey information with the Department of Taxation by June 30 of each year;

     (2)  Requires the Department of Taxation to report to the Legislature by September 1 of each year on the information collected by the survey, and by December 1 of each year on the effectiveness of the tax credit for qualified research activities;

     (3)  Extends the income tax credit for qualified research activities for five years; and

     (4)  Makes technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Economic Development and Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1642, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1642, 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 Technology,

____________________________

CAROL FUKUNAGA, Chair