STAND. COM. REP. 1474

Honolulu, Hawaii

, 2003

RE: S.B. No. 359

S.D. 2

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 359, S.D. 2, H.D. 1, entitled:

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

begs leave to report as follows:

The purpose of this bill is to provide incentives for motion picture and film production in Hawaii by:

(1) Expanding the tax credit for costs incurred in the production of motion picture or television films (Tax Credit) to include costs incurred in the production of commercials that advertise products and services to consumers;

and

(2) Increasing the amount of the Tax Credit to:

(A) Eight percent of the costs incurred in any county with a population of over 700,000; and

(B) Ten percent of the costs incurred in any county with a population of 700,000 or less;

In addition, this bill:

(1) Prohibits any taxpayer that has claimed a Tax Credit from qualifying as a "qualified high technology business" for certain other tax benefits, including the income tax exclusion for royalties under section 235-7.3, Hawaii Revised Statutes (HRS); and

(2) 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 that may be enacted and implemented to encourage the acquisition, use, and local availability of television and movie production equipment in the State.

The Office of Economic Development of Maui County, Big Island Film Office of Hawaii County, Kauai Film Office of Kauai County, Honolulu Film Office of the City and County of Honolulu, FilmWorks Pacific & FilmWorks Press, University of Hawaii Cinematic and Digital Arts Program, Association of Independent Commercial Producers, Inc., Hawaii Movie Studios, LLC, Reel Services/Hawaii, Inc., Pacific Focus Inc., Hawaii Media Inc., SDR Films, Screen Actors Guild Hawaii Branch, Makua Pictures, Radio & Cellular Rentals, Olena Productions, and eight concerned citizens supported this bill. The Hawaii State AFL-CIO supported the intent of this bill. The Department of Taxation and the Department of Business, Economic Development, and Tourism opposed this bill. The Tax Foundation of Hawaii offered comments.

Your Committee has amended this bill by:

(1) Allowing the Tax Credit to be claimed only upon a declaration by the Governor;

(2) Requiring the Governor to issue a declaration allowing taxpayers to claim the Tax Credit when general fund tax collections at the close of each of two successive fiscal years exceed 7.5 percent of general fund tax collections for each of the prior two fiscal years;

(3) Requiring the Director of Taxation to notify the Governor of general fund tax collections at the close of every year;

(4) Making the tax credit apply to taxable years beginning after December 31, 2002 and repealing it on January 1, 2008; and

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

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 S.B. No. 359, S.D. 2, H.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, H.D. 2.

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

 

____________________________

DWIGHT Y. TAKAMINE, Chair