STAND. COM. REP. NO.3306

Honolulu, Hawaii

, 2002

RE: H.B. No. 2570

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 2570, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE CAPITAL GOODS EXCISE TAX CREDIT,"

begs leave to report as follows:

The purposes of this measure are to:

(1) Eliminate the three per cent capital goods excise tax credit rate set for 1987, and delete reference to a county general excise and use tax surcharge;

(2) Exempt from capital goods excise tax credit recapture provisions, computer technology or equipment contributed to certain entities;

(3) Delete the "actual invoice price of tangible personal property" as representing the cost upon which the tax credit shall be based; and

(4) Include "canned computer software" as eligible depreciably tangible personal property after December 31, 2001.

Testimony supporting this measure was received from the Department of Taxation and Sato & Yamamoto, LLP. The Tax Foundation of Hawaii submitted comments on this measure.

Your Committee finds that this measure clarifies and simplifies the administration of the capital goods excise tax credit. It has been a continual mission of the State to nurture and support Hawaii's technology industry and the businesses that rely on the industry to provide needed products and services. This measure encourages the donation of computer technology or equipment to entities that need them by eliminating the recapture of the credit for those donations.

Your Committee has amended this measure by:

(1) Applying the exemption from the recapture provisions only to computer equipment;

(2) Clarifying that the costs for which another tax credit was claimed under chapter 235, Hawaii Revised Statutes, shall not be eligible for the capital goods excise tax credit;

(3) Clarifying the educational entities to which a contribution may be made;

(4) Adding to the qualifying educational donees of computer equipment:

(a) An educational institution, which normally maintains faculty and curriculum and normally has regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on;

(b) The community college system established under chapter 305, Hawaii Revised Statutes;

(5) Clarifying that original use of the computer equipment must have been by the purchaser/donor;

(6) Deleting the provision specifying that the computer equipment fit productively into the donee's education plan;

(7) Redefining "canned computer software" as a pre-written set of instructions or statements, which is capable of causing a computer to indicate, perform, or achieve a particular function, task, or result that has a general applicability and has not been prepared at the special request of the purchaser to meet the purchaser's particular needs;

(8) Deleting repeal of actual invoice price; and

(9) Changing the effective date of this measure to December 31, 2050, for the purpose of furthering discussion on this measure.

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 H.B. No. 2570, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2570, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

BRIAN T. TANIGUCHI, Chair