STAND. COM. REP. NO.  628

Honolulu, Hawaii

                , 2015

RE:   H.B. No. 1172

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No. 1172 entitled:

"A BILL FOR AN ACT RELATING TO RESEARCH ACTIVITIES,"

begs leave to report as follows:

The purpose of this measure is to provide that, notwithstanding the provisions of the Internal Revenue Code to the contrary, the amount of the state income tax credit for research activities shall be calculated based on all qualified research expenses for the taxable year instead of on the increase of expenses over past years.   

Pacific Shipyards International; Hawaii Evolutionary Development, LLC; Chamber of Commerce Hawaii; Cardax, Inc.; Oceanit; Navatek Ltd.; and numerous individuals supported this measure.  The Department of Taxation opposed this measure.  The High Technology Development Corporation and Tax Foundation of Hawaii commented on this measure.  

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 2030, to encourage further discussion; and

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

     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. 1172, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1172, H.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

SYLVIA LUKE, Chair