HI.TECH
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By John Duchemin
Advertiser Staff Writer
The high-tech lobby has chosen sides, and it is not the one Gov. Linda Lingle is on.
Far from it. During and after the latest legislative session, the two main pro-tech advocacy groups have acted like their mission is to protect their industry from Lingle, whom they successfully fought on her proposed changes to the Act 221 high-tech tax incentives.
The Hawaii Venture Capital Association says Lingle, an avowed friend of business, is "waging war ... against the tech and business community" by trying to scale back Act 221. Lingle wants to tighten Act 221 to remove loopholes that her administration claims have led to tens of millions of dollars in lost state revenues.
"This administration is barreling ahead even if it means reneging on promises, engaging in closed-door policy making, waging war in the media," association president Bill Spencer said in his group's May newsletter. "The victim, it seems, will be Hawai'i's economic future, something this administration seems prepared to trade in favor of the status quo."
The Hawaii Technology Trade Association sent an e-mail in May congratulating its members for helping thwart Lingle's proposed changes to Act 221. The e-mail also asked association members to "offer a hand" to Lingle, to refrain from "overly aggressive tax strategy" and to cooperate with the Tax Department.
What gives here? Why are two mild-mannered, non-partisan lobbying groups suddenly loading for bear?
The high-tech lobbyists would argue that they are articulating industrywide complaints against the Republican governor, who promised her steadfast support during her campaign. The lobbyists say Lingle's attempt to change Act 221 is a break of that promise. The changes, they say, will scare away investors and choke off tax credits that could lead to hundreds of jobs.
More likely, however, is that the HTTA and HVCA aren't representing the universal views of their industry. Not only have some of the state's most successful high-tech figures publicly disagreed with their own lobbying groups — Tareq Hoque, former chairman of HTTA, is one example — but some are convinced that the lobbyists are obsessing on Act 221 to a dangerous degree.
Some argue that the lobbying groups' stance has divided the technology community between those who have a strong motivation to keep Act 221 in its present form — accounting firms, law firms, and others who realize the short-term benefit from performing Act 221 transactions — and those who are motivated by other needs. The fight with Lingle, the argument goes, is harming the core goal of developing a thriving technology industry, which in theory is the mission of both high-tech groups.
"The good news is we do have a tech community and the 221 wrangling has galvanized the group," wrote Jeff Bloom, president of Computer Training Academy, in an e-mail to The Advertiser. "I now hope they can figure out how to move forward. There are more issues than just tax credits."
Fighting Lingle with such forcefulness is a risky, divisive strategy that could easily backfire.
The tech industry isn't yet at the point that it can stand on its own, without substantial government support.
Under Lingle's predecessor, the government at times seemed to have more faith in high-tech Hawai'i than the industry did in itself. That's not the case, now — and may never be if the tech lobby keeps lobbing arrows at the new governor.
Reach John Duchemin at 525-8062 or jduchemin@honoluluadvertiser.com.
Correction: The Hawaii Technology Trade Association sent an e-mail in May congratulating its members for helping thwart Gov. Linda Lingle's proposed changes to Act 221. A previous version of this column incorrectly characterized the contents of the e-mail.
