HOUSE OF REPRESENTATIVES
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO CREATIVE MEDIA DEVELOPMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the film, television, and digital media industries in Hawaii are important components of a diversified economy and that their financial impact can be strengthened significantly if existing incentives for the industries are adjusted.
The legislature also finds that nearly every country and state has implemented tax incentives to attract film, television, and digital media productions. These jurisdictions have experienced dramatic increases in spending and significant growth in workforce and infrastructure development. More productions in Hawaii would stimulate more direct and indirect tax revenue.
The legislature further finds that it is desirable to provide incentives to the film, television, and digital media industries to encourage similar dramatic growth in Hawaii because the film, television, and digital media industries:
(1) Infuse significant amounts of new money into the economy, which are dispersed across many communities and businesses and which benefit a wide array of residents;
(2) Create skilled, high-paying jobs;
(3) Have a natural dynamic synergy with Hawaii's top industry (tourism) and are used as a destination marketing tool for the visitor industry; and
(4) Are clean, nonpolluting industries that value the natural beauty of Hawaii and its diverse multicultural population and wide array of architecture.
The purpose of this Act is to continue to encourage the film, television, and digital media industries by allowing Hawaii to compete with other film production centers in attracting a greater number of significant projects to the islands; continuing to build the State's local film, television, and digital media industries; and encouraging the growth of the film, television, and digital media industries by providing enhanced incentives to attract more film, television, and digital media productions to Hawaii, thereby generating increased tax revenues.
SECTION 2. Section 235-17, Hawaii Revised Statutes, is amended as follows:
1. By amending its title to read:
"§235-17 Motion picture, television, digital media, and film production income tax credit."
2. By amending subsections (g) and (h) to read:
"(g) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director of taxation may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(h) Every taxpayer claiming a tax credit under this section for a qualified production shall, no later than ninety days following the end of each taxable year in which qualified production costs were expended, submit a written, sworn statement to the department of business, economic development, and tourism, identifying:
(1) All qualified production costs as provided by subsection (a), if any, incurred in the previous taxable year;
(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and
(3) The number of total hires versus the number of local
hires by category [
(i.e., department)] and by county."
3. By amending subsection (j) to read:
"(j) Total tax credits claimed per
qualified production shall not exceed [
$8,000,000.] $ ."
4. By amending subsection (l) to read:
"(l) For the purposes of this section:
(1) Means an advertising message that is filmed using
film, videotape, or digital media, for dissemination via television broadcast [
theatrical distribution[ ;], or Internet distribution; and
(2) Includes a series of advertising messages if all
parts are produced at the same time over the course of six consecutive weeks[
and (3) Does not include an advertising message
with Internet-only distribution].
"Digital media" means production
methods and platforms directly related to the creation of cinematic imagery and
content, specifically using digital means, including but not limited to digital
cameras, digital sound equipment, and computers, to be delivered via film,
videotape, interactive game platform, or other digital distribution media [
"Post production"] "Post-production"
means production activities and services conducted after principal photography
is completed, including but not limited to editing, film and video transfers,
duplication, transcoding, dubbing, subtitling, credits, closed captioning,
audio production, special effects (visual and sound), graphics, and animation.
"Production" means a series of
activities that are directly related to the creation of visual and cinematic
imagery to be delivered via film, videotape, or digital media and to be sold,
distributed, or displayed as entertainment or the advertisement of products for
mass public consumption, including but not limited to scripting, casting, set
design and construction, transportation, videography, photography, sound
recording, interactive game design, and [
post production.] post-production.
(1) Means a production, with expenditures in the State, for the total or partial production of a feature-length motion picture, short film, made-for-television movie, commercial, music video, interactive game, television series pilot, single season (up to twenty-two episodes) of a television series regularly filmed in the State (if the number of episodes per single season exceeds twenty-two, additional episodes for the same season shall constitute a separate qualified production), television special, single television episode that is not part of a television series regularly filmed or based in the State, national magazine show, or national talk show. For the purposes of subsections (d) and (j), each of the aforementioned qualified production categories shall constitute separate, individual qualified productions; and
(2) Does not include: [
(A) Daily news; [
(B) Public affairs programs; [
(C) Non-national magazine or
talk shows; [
(D) Televised sporting events or
(E) Productions that solicit
(F) Productions produced
primarily for industrial, corporate, institutional, or other private purposes;
(G) Productions that include any material or performance prohibited by chapter 712.
"Qualified production costs" means the costs incurred by a qualified production within the State that are subject to the general excise tax under chapter 237 or income tax under this chapter and that have not been financed by any investments for which a credit was or will be claimed pursuant to section 235‑110.9. Qualified production costs include but are not limited to:
(1) Costs incurred during preproduction such as location scouting and related services;
(2) Costs of set construction and operations, purchases or rentals of wardrobe, props, accessories, food, office supplies, transportation, equipment, and related services;
(3) Wages or salaries of cast, crew, and musicians;
(4) Costs of photography, sound synchronization, lighting, and related services;
(5) Costs of editing, visual effects, music, other post-production, and related services;
(6) Rentals and fees for
use of local facilities and locations[
;], but excluding state and
county facility and location fees that are not subject to general excise tax
under chapter 237 or state income tax under this chapter;
(7) Rentals of vehicles and lodging for cast and crew;
(8) Airfare for flights to or from Hawaii, and interisland flights;
(9) Insurance and bonding;
(10) Shipping of equipment and supplies to or from Hawaii, and interisland shipments; and
(11) Other direct production costs specified by the department in consultation with the department of business, economic development, and tourism."
SECTION 3. Act 88, Session Laws of Hawaii 2006, is amended by amending section 4 to read as follows:
"SECTION 4. This Act shall take effect on July 1, 2006; provided that:
(1) Section 2 of this Act shall apply to qualified
production costs incurred on or after July 1, 2006, and before January
2016;] 2025; and
(2) This Act shall be repealed on January 1, [
2025, and section 235-17, Hawaii Revised Statutes, shall be reenacted in
the form in which it read on the day before the effective date of this Act."
SECTION 4. The department of business, economic development, and tourism shall submit an annual report to the legislature twenty days prior to each regular session beginning with the 2014 regular session. The report shall contain a cost benefit analysis of the motion picture, television, digital media, and film production income tax credit, including but not limited to the following:
(1) The total number of full-time, part-time, and contract personnel on the payroll necessary to administer the film production tax credit; and
(2) The average wage of each of the above personnel groups and total earnings for the year.
The department of business, economic development, and tourism shall report the data collected under this section along with a cumulative total of tax credits granted for each qualified production. The legislature may use the information to determine whether the tax credits are meeting the objectives of the film production tax credit and this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act, upon its approval, shall take effect on July 1, 2013; provided that this Act shall apply to taxable years beginning after December 31, 2012, and before January 1, 2025.
Creative Media Development; Tax Credit
Amends motion picture, digital media, and film production tax credits. Deletes Internet-only distribution exclusion for advertising; clarifies definitions of qualified production costs; amends the ceiling on total tax credit claim; and extends the sunset date to January 1, 2025. (HB799 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.