STAND. COM. REP. NO. 437-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2611

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committees on Economic Development and Business Concerns and Tourism and Culture, to which was referred H.B. No. 2611 entitled:

"A BILL FOR AN ACT RELATING TO THE ENTERTAINMENT INDUSTRY,"

beg leave to report as follows:

The purpose of this bill is to provide incentives to attract film, video, and sound recording productions to the State by:

(1) Establishing a refundable, labor expenditure tax credit for the costs of a producer to hire labor from within the State; and

(2) Expanding the existing 4 percent motion picture and film production income tax credit (§235-17, Hawaii Revised Statutes (HRS)) (production tax credit) to include costs incurred in the State for the creation of sound recordings to create and distribute phonorecords.

Two concerned individuals submitted testimony in support of this measure. The Department of Taxation and Department of Business, Economic Development, and Tourism supported the intent of this measure.

Your Committees have amended this bill by:

(1) Removing the establishment of a film, television, and music labor expenditure credit;

(2) Expanding the scope of the production tax credit to include digital media and sound recording productions;

(3) Increasing the current production tax credit from 4 percent to 15 percent of costs incurred;

(4) Clarifying the requirements a production must have to qualify for the production tax credit, such as a minimum amount of expenditure and a minimum percentage of labor hired from within the State;

(5) Requiring qualifying taxpayers to submit to DBEDT a report detailing costs and tax credit claimed, after which DBEDT will issue them a certificate of verification;

(6) Defining "below-the-line hires," "commercials," post production," "production," and "sound recording";

(7) Establishing requirements that must be met by businesses producing performing arts products as defined in section 235-7.3, HRS, that are claiming the high technology business investment tax credit (high-tech credit) under section 235-110.9, HRS, specifically, minimum expenditure and labor hires from within the State; and

(8) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the records of votes of the members of your Committees on Economic Development and Business Concerns and Tourism and Culture that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2611, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2611, H.D. 1, and be referred to the Committee on Finance.

 

Respectfully submitted on behalf of the members of the Committees on Economic Development and Business Concerns and Tourism and Culture,

 

____________________________

JERRY L. CHANG, Chair

____________________________

BRIAN SCHATZ, Chair