STAND. COM. REP. NO. 2635

Honolulu, Hawaii

RE:    S.B. No. 2941

       S.D. 2

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 2941, S.D. 1, 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)  Extend the income tax credit for qualified research activities for an additional five years; and

     (2)  Add extensive reporting requirements related to the tax credit.

     Written comments on this measure were submitted by the Hawaii Strategic Development Corporation; the High Technology Development Corporation; and the Tax Foundation of Hawaii.

     Your Committee finds that fostering and encouraging innovation is essential to a comprehensive economic strategy for the State.  Innovation is essential for creating new jobs in both high technology and traditional sectors.  Your Committee also finds that research and development activities are critical to stimulate an innovation economy.

     Your Committee finds that the state tax credit for research activities was an effective measure to support research and development activities.  Your Committee also finds that the tax credit has been a great source of support for local research and development companies, especially early-stage research and development companies that are not yet profitable and have few sources of funding.  Extending this tax credit will provide critical support to research activities in the State.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

     (2)  Making technical nonsubstantive amendments for the purposes of clarity and style.

     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. 2941, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2941, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair