STAND. COM. REP. NO.382

Honolulu, Hawaii

, 2003

RE: S.B. No. 836

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development, to which was referred S.B. No. 836 entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

The purpose of this measure is to provide an entrepreneur tax credit for taxpayers that create and maintain high paying jobs in Hawaii.

Testimony supporting this measure was received from the High Technology Development Corporation, Cendant Corporation/Fairfield Resorts, and High Technology Trade Association. The Department of Taxation took no position on the measure but submitted comments.

Your Committee finds that retooling Hawaii's economy will require a public-private agenda that invests in people and infrastructure. Together, government and business must create an innovative, entrepreneurial culture if Hawaii is to successfully compete for its share of global markets.

As pointed out by Enterprise Honolulu CEO, Mike Fitzgerald, global strategies among states and businesses are similar -- everyone is looking to create high skill, high-wage jobs. Hawaii must differentiate its uniqueness and strengths in order to compete successfully. Technology must be infused throughout all industries rather than simply among high-tech, media and communications businesses. For example, when kamaaina retailer Liberty House was acquired by Macy's, a significant market opportunity was lost because many of its local vendors were not Internet-adept. They could not directly access Macy's national markets in spite of the fact that "island-lifestyle" garments, food and agricultural products or home furnishings have been hot retail items throughout the world.

Your Committee believes that the tax credit provided in this measure provide a starting point for developing appropriate incentives for creation of new, higher-paying jobs in high-demand businesses.

Your Committee has amended this measure by:

(1) Adding a findings and purpose section expressing the intent of this measure;

(2) Confining this tax credit to qualified high technology businesses, and small businesses with twenty-five employees or less and a gross annual income of $5,000,000 or less;

(3) Specifying that this measure shall apply to taxable years beginning after December 31, 2002, and apply to full-time employees hired after June 30, 2003, and before July 1, 2008; and

(4) Making technical, nonsubstantive changes to reflect proper drafting style.

As affirmed by the record of votes of the members of your Committee on Economic Development that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 836, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 836, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development,

____________________________

CAROL FUKUNAGA, Chair