STAND. COM. REP. NO. 1052-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2482
                                     S.D. 1
                                     H.D. 1



Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Economic Development and Business
Concerns and Higher Education, to which was referred S.B. No.
2482, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO TECHNOLOGY BUSINESS
     TAXATION,"

beg leave to report as follows:

     The purpose of this bill is to support the development of
the biotechnology industry in Hawaii by:

     (1)  Allowing biotechnology companies to sell their unused
          net operating loss carryover and unused tax credits to
          other qualified biotechnology companies; and

     (2)  Extending the capital loss carryforward to fifteen
          years for biotechnology companies.

     The Hawaii Technology Trade Association testified in support
of the measure.  The Department of Business, Economic
Development, and Tourism testified in support of the intent of
the measure.  The Department of Taxation (DOTAX) also testified
in support of the intent of the measure but had concerns that the
bill would add complexity to Hawaii's tax laws and impose
administrative burdens on both state taxpayers and DOTAX.  The
Tax Foundation of Hawaii submitted comments on the measure.

     It is the intent of your Committees to find an appropriate
definition for "technology consulting services" so that companies
that provide such services may benefit from the provisions in
this bill.

 
                                 STAND. COM. REP. NO. 1052-00
                                 Page 2

 
     Your Committees have amended this bill by:

     (1)  Adding the substantive provisions of H.B. No. 2607,
          H.D. 2, which strengthens high technology business
          incentives provided in Act 178, Session Laws of Hawaii
          1999, for high technology businesses;

     (2)  Inserting the amounts of $1 with regard to the limit of
          the net operating loss carryovers and tax credits that
          a qualified biotechnology company may sell;

     (3)  Changing the applicability of the bill to taxable years
          beginning after December 31, 2010; and

     (4)  Making technical, nonsubstantive amendments for clarity
          and style.

     As affirmed by the records of votes of the members of your
Committees on Economic Development and Business Concerns and
Higher Education that are attached to this report, your
Committees are in accord with the intent and purpose of S.B. No.
2482, S.D. 1, as amended herein, and recommend that it pass
Second Reading in the form attached hereto as S.B. No. 2482, S.D.
1, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Economic
                                   Development and Business
                                   Concerns and Higher Education,

                                   
                                   
                                   
                                   
______________________________     ______________________________
DAVID MORIHARA, Chair              ROBERT N. HERKES, Chair