Income Tax; Digital Divide Investment Act; Broadband Services
Amends the income tax law to enact the Digital Divide Investment Act. Provides an income tax credit for investment in broadband equipment to encourage the expansion of broadband services in underserved communities.
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
relating to the income tax law.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Digital Divide Investment Act; tax credit for investment in broadband equipment. (a) Subject to the limitations of this section, there shall be allowed to a taxpayer subject to the taxes imposed by this chapter, a nonrefundable credit, which shall be deductible from the taxpayer's net corporate income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed, for expenditures for qualified broadband equipment in Hawaii.
(b) The amount of the credit shall be three per cent of the expenditures incurred in Hawaii during the taxable year for qualified broadband equipment and shall be in addition to any credit for capital investment permitted by this chapter.
(c) No equipment described in the definition of "qualified broadband equipment" shall qualify for the credit until the taxpayer applies to and obtains from the public utilities commission an order confirming that the installed equipment is qualified broadband equipment. Applications submitted to the commission shall be governed by the commission's rules of procedure. The commission may issue procedural orders necessary to implement this section.
(d) The credit, in any one taxable year, shall not exceed the lesser of the amount of corporate income tax due under section 235-71 or 235-71.5 or $750,000.
(e) The director of taxation:
(1) Shall prepare any forms that may be necessary to claim a credit under this section;
(2) May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and
(3) May adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91, including rules prescribing, in the case of S corporations, partnerships, trusts, or estates, a method of attributing the credit under this section to the shareholders, partners, or beneficiaries in proportion to their share of the income from the S corporation, partnership, trust, or estate.
(f) To qualify for the income tax credit under this section, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.
(g) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2002, and shall not be available for taxable years beginning after December 31, 2007.
(h) As used in this section:
"Depreciable property" means depreciable property that is eligible for the federal investment tax credit, as defined in sections 46(c) and 48 of the Internal Revenue Code, and subject to the limitations provided for certain regulated companies in section 46(f) of the Internal Revenue Code.
"Qualified broadband equipment" means equipment that is depreciable property, is capable of transmitting signals at a rate of at least two hundred thousand bits per second to a subscriber and at least one hundred twenty-five thousand bits per second from a subscriber, and transmits signals to subscribers in an underserved community, and:
(1) In the case of a telecommunications carrier, qualifying equipment shall be necessary to the provision of broadband service and an integral part of a broadband network. "Telecommunications carrier" has the meaning given that term by section 3(44) of the Communications Act of 1934, as amended, but does not include a commercial mobile service provider;
(2) In the case of a commercial mobile service carrier, qualifying equipment shall extend from the subscriber side of the mobile telecommunications switching office to a transmitting/receiving antenna, including the antenna itself, on the outside of the structure in which the subscriber is located. "Commercial mobile service carrier" means any person authorized to provide commercial mobile radio service to subscribers, as defined in section 20.3 of title 47, Code of Federal Regulations (10-1-99 ed.), as amended;
(3) In the case of a cable or open video system operator, qualifying equipment shall extend from the subscriber's side of the headend to the outside of the structure in which the subscriber is located. The terms "cable operator" and "open video system operator" have the meanings given those terms by sections 602(5) and 653, respectively, of the Communications Act of 1934, as amended;
(4) In the case of a satellite carrier or a wireless carrier other than listed in this definition, qualifying equipment is only that equipment that extends from a transmitting/receiving antenna, including the antenna itself, that transmits and receives signals to or from multiple subscribers to a transmitting/receiving antenna on the outside of the structure in which the subscriber is located. "Satellite carrier" means any person using the facilities of a satellite or satellite services licensed by the Federal Communications Commission and operating a fixed-satellite service or direct broadcast satellite services to provide point-to-multipoint distribution of signals. "Other wireless carrier" means any person, other than a telecommunications carrier, commercial mobile service carrier, cable operator, open video operator, or satellite carrier, providing broadband services to subscribers through the radio transmission of energy;
(5) In the case of packet switching equipment, packet equipment shall be installed in connection with other qualifying equipment listed in this definition, provided that it is the last in a series of equipment that transmits signals to a subscriber or the first in a series of equipment that transmits signals from a subscriber. "Packet switching" means controlling or routing the path of a digital transmission signal which is assembled into packets or cells;
(6) In the case of multiplexing and demultiplexing equipment, equipment shall be qualifying only to the extent that it is deployed in connection with providing broadband services in locations between packet switching equipment and the structure in which the subscriber is located. "Multiplexing" means the transmission of two or more signals over a communications circuit without regard to the communications technology; and
(7) Any property not primarily used to provide services in Hawaii to public subscribers is not qualified broadband equipment.
"Underserved community" means a census tract that is designated underserved by the public utilities commission after the commission finds that less than twenty-five per cent of households have access to broadband service."
SECTION 2. Section 269-6, Hawaii Revised Statutes, is amended to read as follows:
"§269-6 General powers and duties. (a) The public utilities commission shall have the general supervision hereinafter set forth over all public utilities, and shall perform the duties and exercise the powers imposed or conferred upon it by this chapter. Included among the general powers of the commission [
is] are the authority to [ adopt]:
(1) Adopt rules pursuant to chapter 91 necessary for the purposes of this chapter[
(2) Issue procedural orders relating to the installation of qualified broadband equipment pursuant to section 235- .
(b) The chairperson of the commission may appoint a hearings officer, who shall not be subject to chapter 76, to hear and recommend decisions in any proceeding before it other than a proceeding involving the rates or any other matters covered in the tariffs filed by the public utilities. The hearings officer shall have the power to take testimony, make findings of fact and conclusions of law, and recommend a decision; provided that the findings of act, the conclusions of law, and the recommended decision shall be reviewed and may be approved by the commission after notice to the parties and an opportunity to be heard. The hearings officer shall have all of the above powers conferred upon the public utilities commission under section 269-10."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2003.