Posted on: Friday, February 6, 2004
Lawmakers, Lingle seeking disclosure of Act 221 recipients
| • | Bill would raise tax credit for filmmakers |
By Sean Hao
Advertiser Staff Writer
Democratic lawmakers and the Lingle administration yesterday agreed on the need to make public the names of businesses claiming Act 221 high technology tax credits.
Since its adoption in 2001, the tax credits have been dogged by controversy over their high cost, potential abuse and the state's secrecy of the names of companies claiming the credits and the amounts involved.
"Sunshine is the best disinfectant," said Ted Liu, director for the Department of Business, Economic Development and Tourism, at a Legislative hearing on possible changes to the act.
Gov. Linda Lingle wants to extend Act 221 through 2010 with certain restrictions. Liu said he favors making public names of beneficiaries and amounts they got going forward and would support the release of the identities of companies that already claimed Act 221 credits if the law allowed it.
Such requirements wouldn't be unprecedented. There are 10 states that require companies receiving tax breaks to disclose how much money they save, according to Good Jobs First, an independent group that tracks economic development incentives.
Rep. Glenn Wakai, D-31st (Salt Lake, Tripler) raised the subject of public disclosure of Act 221 beneficiaries at a joint hearing yesterday of the House Committee on Economic Development and Business Concerns and the Committee on Energy and Environmental Concerns.
"I don't particularly care to see all the financials for one of these companies," Wakai said. "I think we want to know who these companies are and what they're getting from the state. Without us knowing any of that, it's just hard for us to see whether there are or aren't abuses."
Department of Taxation Director Kurt Kawafuchi, who has said state law precludes disclosing names of Act 221 beneficiaries, wants to study the matter further before saying whether he would support disclosure.
"You have a very good point to the extent the taxpayers are subsidizing it. There's a good argument" for that," he said.
The lawmakers deferred a decision on changes to Act 221 until next week. However, Rep. Brian Schatz, D-25th (Makiki, Tantalus), chairman of the economic development committee, said it was highly likely they would propose an amendment that would require public disclosure of Act 221 companies and claims. Schatz also supports such a move.
Among the changes sought by Lingle are limiting the research tax credit portion of the act to certain kinds of research, making the application of the act less liberal and providing guidance meant to curtail investment tax credit returns that in some cases have been higher than intended.
Act 221 will terminate at the end of 2005 unless extended by lawmakers.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
