STAND. COM. REP. NO. 2773

Honolulu, Hawaii

RE: S.B. No. 3035

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred S.B. No. 3035 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to establish the ocean sciences research tax credit to foster research and development in ocean sciences.

Your Committee received testimony in support of this measure from the Natural Energy Laboratory of Hawaii Authority; Makai Ocean Engineering, Inc.; Chamber of Commerce Hawaii; and one individual. Your Committee received comments on this measure from the Department of the Attorney General, Department of Taxation, and Tax Foundation of Hawaii.

Your Committee finds that Hawaii needs to focus on new and innovative ways of bringing in money to support high-demand jobs for Hawaii's economy to flourish. The geographical location of Hawaii makes research and development in ocean sciences an essential part of the State's sustainability goals and promotes the creation of innovation and technology that are beneficial to enhancing the State's economy. Your Committee finds that Hawaii is a prime location to be a leader in ocean sciences and has the natural resources to attract different business and revenues to the State. Focusing on the research and development industry for ocean sciences will create a wide range of highly-skilled workers and high-paying jobs for people in the State. This measure will diversify the State's economy and bring in new jobs in ocean sciences, research, and development.

Your Committee has amended this measure by:

(1) Prohibiting a qualified entity from claiming other tax credits for expenses or costs paid with an investment made into a qualified entity for which an ocean sciences research tax credit was claimed;

(2) Defining "small business" to mean a business that employs ten or less employees and has revenues of less than $1,000,000 a year;

(3) Making this measure apply to taxable years beginning after December 31, 2020; and

(4) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Energy, Economic Development, and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3035, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3035, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy, Economic Development, and Tourism,

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GLENN WAKAI, Chair