Posted on: Wednesday, April 11, 2001

High-tech tax breaks pass House, Senate

By John Duchemin
Advertiser Staff Writer

The state House and Senate yesterday passed separate versions of bills to expand tax benefits for high-technology companies.

The proposals now head for one final committee for reconciliation before they can be approved — or vetoed — by the governor.

Both bills, which mainly differ in procedural language, call for broader tax exemptions for technology companies and a new tax credit for investors in tech companies.

Although they breezed through several months of hearings and votes, they face a possible veto from Gov. Ben Cayetano. Administration officials have argued that some of the proposed benefits are too sweeping and counterproductive.

The administration earlier submitted similar legislation, but the Legislature opted for the industry version. Administration officials have worked with lobbyists including the Hawai'i Technology Trade Association to iron out differences.

The bills would provide benefits including tax exemptions for high-tech construction, and thousands or millions of dollars in tax credits for investors in high-tech companies.

They would also expand the ability of tech companies to "sell" net losses to other companies, who could then use that to offset their own tax burdens.

The legislation follows "New Economy" bills passed in 1999 and 2000, which provided the state's first tax incentives for high-tech firms.