REPORT TITLE:
Film Industry Tax Credit


DESCRIPTION:
Increases the income tax credit for film production from four
percent to eight percent.  (HB2960 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2960
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE FILM INDUSTRY. 


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 201, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "201-    State of Hawaii revolving film fund; established.
 
 5 There is established the State of Hawaii revolving film fund into
 
 6 which shall be deposited all moneys that may be appropriated by
 
 7 the legislature, received in repayment of loan principal, payment
 
 8 of interest, or fees, or loaned or granted by the department of
 
 9 business, economic development, and tourism under this section.
 
10 All moneys shall be used to:
 
11      (1)  Fund and assist independent filmmakers in Hawaii to
 
12           produce films in the State;
 
13      (2)  Attract independent filmmakers outside of Hawaii to
 
14           produce films in the State; and
 
15      (3)  Promote and fund film production apprenticeships and
 
16           apprenticeship programs,
 
17 utilizing primarily local creative and technical personnel, and
 
18 from which the department may fund Hawaii film projects under
 
19 agreements with any state or county agency or other
 
20 organizations.  The department may use all appropriations and
 

 
Page 2                                                     2960
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 other moneys in the revolving fund not appropriated for a
 
 2 designated purpose to make grants or loans; provided that at no
 
 3 time shall the department reallocate funds from the loan program
 
 4 to the grant program so that insufficient funds remain available
 
 5 to make loans."
 
 6      SECTION 2.  Section 235-17, Hawaii Revised Statutes is
 
 7 amended by amending subsection (a) as follows:
 
 8      "(a)  There shall be allowed to each taxpayer subject to the
 
 9 taxes imposed by this chapter, an income tax credit which shall
 
10 be deductible from the taxpayer's net income tax liability, if
 
11 any, imposed by this chapter for the taxable year in which the
 
12 credit is properly claimed.  The amount of the credit shall be up
 
13 to [four] eight per cent of the costs incurred in the State in
 
14 the production of motion picture or television films.  The
 
15 director of taxation shall specify by rule a schedule of
 
16 allowable tax credits based on the principle that greater tax
 
17 credits shall be allowed for greater benefits to the state
 
18 economy.
 
19      In the case of a partnership, S corporation, estate, or
 
20 trust, the tax credit allowable is for production costs incurred
 
21 by the entity for the taxable year.  The cost upon which the tax
 
22 credit is computed shall be determined at the entity level.
 
23 Distribution and share of credit shall be determined by rule.
 

 
Page 3                                                     2960
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      If a deduction is taken under section 179 (with respect to
 
 2 election to expense depreciable business assets) of the Internal
 
 3 Revenue Code of 1986, as amended, no tax credit shall be allowed
 
 4 for those costs for which the deduction is taken.
 
 5      The basis for eligible property for depreciation of
 
 6 accelerated cost recovery system purposes for state income taxes
 
 7 shall be reduced by the amount of credit allowable and claimed."
 
 8      SECTION 3.  There is appropriated out of the general
 
 9 revenues of the State of Hawaii the sum of $1 for fiscal year
 
10 2000-2001 to be paid into the State of Hawaii revolving film fund
 
11 created in section 201-   , Hawaii Revised Statutes.
 
12      SECTION 4.  There is appropriated out of the general
 
13 revenues of the State of Hawaii the sum of $1 or so much thereof
 
14 as may be necessary for fiscal year 2000-2001 to provide funds to
 
15 the department to assist Hawaii-based film companies in the
 
16 production of documentary films relating to the Pacific region.
 
17      SECTION 5.  The sums appropriated shall be expended by the
 
18 department of business, economic development, and tourism, and
 
19 administered by the film industry branch.
 
20      SECTION 6.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 

 
 
 
 
 
Page 4                                                     2960
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 7.  This Act shall take effect on July 1, 2000,
 
 2 provided that section 2 shall apply to taxable years beginning
 
 3 after December 31, 1999.