STAND. COM. REP. NO.965

Honolulu, Hawaii

, 2003

RE: S.B. No. 359

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 359, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO FILM INDUSTRY,"

begs leave to report as follows:

The purpose of this Act is to expand the income tax credit for motion picture and film production to keep pace with national and international competition.

In particular, this measure:

    1. Increases the tax credit for motion picture and film production to include up to fifteen per cent of the first $25,000 of each employee's wages and salaries, and applies the credit to wages and salaries incurred after June 30, 2003;
    2. Specifies that motion picture and film production includes commercials that advertise products and services to consumers;
    3. Provides that any taxpayer that claims a credit for motion picture and film production shall not qualify as a qualified high technology business for purposes of section 235-7.3, Hawaii Revised Statutes, which excludes royalties derived from patents, copyrights, or trade secrets from gross income; and
    4. Requires the Hawaii Television and Film Development Board, with participation from Hawaii's film and media industry, to review and propose recommendations on possible tax or other incentives to encourage the acquisition, utilization, and local availability of television and movie production equipment in Hawaii and to report to the Legislature prior to the 2004 Regular Session.

Your Committee finds that while the existing income tax credit for motion picture and film production has provided incentives for motion picture and television film producers to film in Hawaii, Hawaii's tax credits are less competitive in comparison with other jurisdictions.

For example, your Committee finds that competitive economic initiatives have been adopted by states such as Oklahoma, which offers a cash rebate of fifteen per cent of documented expenditures in that state that are directly related to film and television production. New Mexico and California also offer greater incentives to encourage film production in those states.

Your Committee therefore agrees with the intent of this measure to broaden the tax credit to expand production opportunities within Hawaii, while at the same time collecting an appropriate level of revenue from these businesses.

Your Committee has amended this measure by:

    1. Changing the effective date to apply to taxable years beginning after December 31, 2015 in order to promote continuing discussion; and
    2. Making technical, nonsubstantive changes.

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. 359, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 359, S.D. 2.

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

____________________________

BRIAN T. TANIGUCHI, Chair