STAND. COM. REP. NO. 871

Honolulu, Hawaii

RE: S.B. No. 921

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 921, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the motion picture, digital media, and film production income tax credit.

More specifically, this measure:

(1) Lowers the cap amount of the tax credit per qualified production from $15,000,000 to $12,000,000; and

(2) Requires the Department of Business, Economic Development, and Tourism to make a public disclosure identifying the names of the taxpayers who receive the tax credit and the total amount of tax credits received.

Your Committee received written comments in opposition to this measure from the Honolulu Film Office; Musicians' Association of Hawaii, Local 677, American Federation of Musicians; and one individual.

Your Committee received written comments on this measure from the Department of Business, Economic Development, and Tourism; Department of Taxation; Motion Picture Association; and Tax Foundation of Hawaii.

Your Committee finds that the motion picture, digital media, and film production income tax credit, codified as section 235-17, Hawaii Revised Statutes, is a competitive production credit program that has attracted significant annual investment in the State's economy. Your Committee also notes the serious economic challenges faced by the State, due to the ongoing coronavirus disease 2019 pandemic.

Your Committee has amended this measure by:

(1) Requiring the Department of Taxation, rather than the Department of Business, Economic Development, and Tourism, to make the public disclosure identifying the names of the taxpayers who receive the tax credit and the total amount of tax credits received;

(2) Repealing a statutory requirement that the information provided by the Department of Business, Economic Development, and Tourism in its report to the Legislature regarding the tax credit be reported in a redacted form to preserve the confidentiality of taxpayers;

(3) Establishing an exception to the general prohibition against the Department of Taxation disclosing tax returns or return information;

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

(5) Making technical nonsubstantive amendments for purposes of clarity, consistency, 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. 921, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 921, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair