STAND. COM. REP. NO. 39

Honolulu, Hawaii

RE: S.B. No. 302

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Labor and Technology, to which was referred S.B. No. 302 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Temporarily reinstate the technology infrastructure renovation tax credit;

(2) Define "data server"; and

(3) Expand the definition of "technology-enabled infrastructure" to include data servers.

Your Committee received testimony in support of this measure from the Hawaii Technology Development Corporation and Servpac Incorporated. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the technology infrastructure renovation tax credit was enacted in 2001 to incentivize the development of high technology infrastructure and encourage the growth of high technology businesses and associated industries in the State. Your Committee recognizes that technology has advanced since the tax credit was first enacted. According to testimony from the Hawaii Technology Development Corporation, cloud software, which is powered by data servers, has become an essential part of every business and increasing the amount of technology infrastructure in the State will help to keep high-tech and innovation jobs in Hawaii.

Your Committee has amended this measure by:

(1) Adopting language recommended by the Department of Taxation to make the technology infrastructure renovation tax credit applicable to taxable years ending on or after December 31, 2023, and beginning on or before December 31, 2025;

(2) Inserting an effective date of January 1, 2050, to encourage further discussion; and

(3) 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 Labor and Technology that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 302, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 302, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor and Technology,

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SHARON MORIWAKI, Chair