STAND. COM. REP. NO.675-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2576

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 2576 entitled:

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

begs leave to report as follows:

The purpose of this bill is to encourage the growth of the high technology industry in Hawaii by:

(1) Amending the income tax exemption for income of an individual or a qualified high technology business from royalties, patents, copyrights, and trade secrets by:

(A) Amending the definition of "performing arts products" to require that at least fifty per cent of postproduction work on commercial television and film performing arts products be performed in Hawaii to qualify for the exemption;

(B) Defining "postproduction work"; and

(C) Expanding the types of software research that falls under the definition of "qualified research" by removing a limiting reference to "fourth generation or higher software;"

and

(2) Amending the high technology business investment tax credit by:

(A) Clarifying that the recapture provisions of this credit apply where a business or an interest in the business has been transferred;

(B) Requiring that a qualified high technology business be in business at the close of its taxable year for investors to claim the credit for that year; and

(C) Declaring that if the credit is claimed in any taxable year, the motion picture credit and the ethanol production credit may not be claimed for that year.

The Department of Taxation and Hawaii Technology Trade Association testified in support of this measure. The Tax Foundation of Hawaii submitted comments.

Your Committee has amended this measure by

(1) Providing that the condition that a qualified high technology business must be in business at the close of its taxable year for investors to claim the high technology investment tax credit for that year, applies regardless of when the investment was made;

(2) Moving to section 4 of the bill, references to dates on which various provisions of the bill will become effective;

(3) Making recapture of the high technology business investment tax credit applicable to transfers of a business or interest in a business that occur after July 1, 2002;

(4) Eliminating specific references to the motion picture credit and the ethanol production credit and replacing them with a general reference to credits for the same investment under chapter 235; and

(5) Making other technical, nonsubstantive amendments for purposes of clarity, conformity, and style.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2576, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2576, H.D. 1.

Respectfully submitted on behalf of the members of the Committee on Finance,

 

____________________________

DWIGHT Y. TAKAMINE, Chair