What's the payoff for all those tax credits?
There's no reason Hawai'i should fly blind as we build a strong technology industry. Yet that's what confidentiality constraints in the current tax credit law force the state to do.
The high-technology investment program, established first under Act 221 and then renewed in Act 215, yielded more than $108 million in tax credits for investors.
That's an impressive figure, yet there is no means to chart how effectively those credits have stimulated our economy.
That's because the law precludes public disclosure: Neither those who invest through the program nor those companies that reap the investment capital can be named publicly.
The state Department of Taxation knows company names and, based on questionnaire data, can estimate how many jobs are created.
But these are soft numbers that rely on the quality of responses from individual companies. The only way to know precisely how many technology jobs result from this investment is to consult with the Department of Labor, which tracks employment data. But state lawyers have advised tax officials against sharing identities with other departments.
This surely could be fixed. And there is precedent for doing so. A tax credit given in 2003 to developers of an aquarium at the Ko Olina Resort & Marina included a requirement that the claimants of the credits be identified.
Even if lawmakers yield to the investors' desire for anonymity, there are possible compromise provisions. Companies that draw on the investment funds could be required to report specifics on jobs created and other indicators.
The public deserves to know whether there's a payoff. Are there high-paying, quality jobs being generated, employment opportunities that diversify our economy beyond tourism and military sectors?
Unfortunately, there's no way to know for certain. The Legislature has long been aware of this problem:; the 2006 session is the time to deal with it.
Correction: A previous version of this story incorrectly stated that all of the $108 million in tax credits in the first three years of the program went to investors. About $35 million of that amount went directly to high-tech companies as an offset for research and development.