By John Duchemin
Advertiser Staff Writer
For the third consecutive year, Gov. Ben Cayetano has prepared a package of tax incentives that could save high-tech companies, investors and employees millions of dollars.
The proposals, which were finalized this week, ask the Legislature to augment and clarify a two-year-old package of "New Economy" tax laws. Those laws, passed in 1999 and expanded in 2000, give technology companies benefits including credits for research expenses, and the right to sell operating losses to other companies which can use those losses to offset their own taxes.
Tech company employees also are exempt from state income tax on stock options.
"The additional tax incentives for the high-technology industry will promote the industrys expansion in Hawaii," the governors staff wrote in a summary explaining the proposed bills impact.
The new proposals would:
Double the sellable amount of operating losses to $1 million per year.
Double the maximum credit for high-technology investments to $1 million per year and allow investors a 100 percent return. The current $500,000 per year credit is set for a 10 percent return, meaning it requires a $5 million investment. Thats too low to compete with other states, according to the staff summary.
The amended law would let high-tech investors claim a $1 million credit from a $1 million investment.
Provide a tax credit for "technology infrastructure" renovations to buildings that need to modernize wiring, security and power systems. The credit would equal 4 percent of renovation expenses.
"These buildings were built before modern communications ... and are in need of renovation to accommodate New Economy business operations," the summary said. The bills would expire Dec. 31, 2005.
[back to top]