STAND. COM. REP. NO. 770-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2396

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 2396, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CAPITAL INVESTMENTS,"

begs leave to report as follows:

The purpose of this bill is to further efforts that encourage the development and growth of new technology-intensive businesses by, among other things:

(1) Establishing a business-research institute tax credit;

(2) Clarifying the existing High Technology Business Investment Tax Credit (Tax Credit) by establishing that a presumption exists that a transaction satisfies the doctrine of economic substance and business purpose if the Tax Credit has an investment tax credit ratio of 2.0 or less of credit for every dollar invested;

(3) Extending the Technology Infrastructure Renovation Tax Credit;

(4) Establishing a refundable tax credit for scientific research by qualified research and development companies that are limited to qualified high technology businesses as defined in the section relating to the Tax Credit;

(5) Creating the Hawaii Private Investment Fund (HPIF) Program to increase the availability of equity and debt capital for emerging, expanding, and restructuring enterprises in Hawaii;

(6) Requiring taxpayers who claim a tax credit for research activities to submit a written, certified statement to the Director of Business, Economic Development, and Tourism (DBEDT) identifying qualified expenditures and the amount of tax credits;

(7) Establishing record-keeping requirements and procedures for the DBEDT;

(8) Giving the Department of Taxation (DoTax) latitude to qualify companies for tax credits pursuant to Act 221, Session Laws of Hawaii 2001; and

(9) Appropriating funds from the Hawaii Strategic Development Corporation Revolving Fund for the 2005-2006 fiscal year to operate the HPIF Program.

The Department of Agriculture submitted testimony in support of this measure. The Hawaii Technology Trade Association, Hawaii Venture Capital Association, University of Hawaii, and a concerned individual supported this measure with amendments. The Chamber of Commerce of Hawaii supported the intent of this measure. DoTax and a concerned individual supported the intent of this measure with amendments. DBEDT, High Technology Development Corporation, Office of Information Practices, Tax Foundation of Hawaii, and PacifiCap Group offered comments.

Your Committee has amended this bill by:

(1) Blanking out the amounts of the Business-Research Institute tax credit and the Hawaii Private Investment Fund tax credit;

(2) Changing the tax credit for scientific research by qualified research and development companies from a refundable to a nonrefundable tax credit; and

(3) Changing the effective date to July 1, 2010,

to facilitate further discussion.

 

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 H.B. No. 2396, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2396, H.D. 2.

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

 

____________________________

DWIGHT Y. TAKAMINE, Chair