Posted on: Friday, November 12, 2004

EDITORIAL
Embrace of tech tax credit helps economy

After years of tumult and controversy, it's encouraging to see the state finally appears to be getting on track with its innovative high-tech tax credit formerly called Act 221.

The credit, originally passed in the waning months of the former Cayetano administration, was roundly criticized by Gov. Linda Lingle and her Cabinet. Lingle talked about abolishing the credit, saying that it was an unnecessary burden on the state treasury and subject to widespread abuse because of its loosely worded construction.

The Legislature responded by tightening up the credit, focusing it on direct innovative research and setting up a certification process that gives the state greater information on who is using the program and for what.

Still missing, of course, is a disclosure program that would allow the public and legislators to know just what kind of industries and what kind of jobs are being created through their gift of tax credits.

The big news, as reported by staff writer Sean Hao, is that the Lingle administration has backed off its previous concern about the law and now will work to "maximize" its benefits to qualified companies and investors.

This word came from Tax Director Kurt Kawafuchi at a meeting this week of tech industry officials and investors.

This is good news. Hawai'i will never be another Silicon Valley, nor should it seek to be so. But in a variety of niche areas, there is great potential for the Islands to build a reputation in the high-tech field. These include medical research, biotech, "high-tech" agriculture and innovations that capitalize on our mid-Pacific location.

Act 221 (now known as Act 215) put us on the national and international map as a place serious about attracting high-technology business.

With this latest embrace by the Lingle administration of the underlying concept, we are poised to take advantage of that reputation and move forward.