The recent "Island Voices" column by Mike Fitzgerald and others representing the high technology investment sector ("Tech credit's value lost in flawed analysis," Oct. 15) misses the point of the draft report completed for the Tax Review Commission in early October.

The Tax Review Commission requested a cost-benefit analysis of Hawai'i's high-technology tax credit. The commission's mandate is to study Hawai'i's tax structure, using standards of fairness and efficiency.

Because of the amount of money involved, taxpayers deserve a study of the Act 221 credit. Act 221 of 2001 provides a 100- percent credit for certain qualified investments. This credit is far more generous than the technology credit offered by any other state.

The logical place to start would be an analysis of individual Qualified High Technology Business investments and corresponding expenditures, jobs and other metrics of performance. However, the authors were barred from working with any individual company data, even redacted items, held by the Department of Taxation. The department argued that providing this kind of access would violate taxpayer confidentiality.

In the absence of company-level data, the study examined industry and statewide data that provide useful information on the impact of the high-technology tax-credit program.

Among the measures we examined were the annual amount of private institutional venture capital raised and the annual number of jobs in Hawai'i's high technology industries. The high-technology jobs measure was developed in a collaborative project carried out by the state Department of Business, Economic Development and Tourism and the Hawai'i high technology industry association.

What critics of the study characterize as internal contradictions are simply not so. For example, the critics incorrectly cite a figure of 4,000 jobs reported by the Department of Taxation. Since the jobs figures reported for tax years 2002 and 2003 are jobs created since inception, by adding these figures together, the critics "double count" some of the jobs.

Many of the jobs reported by the Department of Taxation under Act 221 are "performing arts" jobs. For example, for tax year 2003, 39.3 percent of these reported Act 221 jobs related to the "performing arts" sector. The high-technology investment sector often claims "performing arts" jobs as "tech" jobs by using the phrase "tech jobs in qualified Act 221/215 sectors."

DBEDT's measure of technology jobs uses the widely-accepted NAICS job classification system and does not include performing arts. This measure shows a decline in the share of technology jobs, compared to all private sector jobs, over the period from 2001— when Act 221 was passed — through 2004, the latest year for which DBEDT has U.S. benchmark data. When compared to the U.S. benchmark, the share of technology jobs in Hawai'i is not much different than for the U.S. as a whole.

We support the goal of nurturing a vibrant and lasting high technology community in Hawai'i.

In analyzing Act 221, we look forward to the industry's cooperation in providing usable data for purposes of assessing the tax credit's effectiveness.

Marcia Sakai, dean of the College of Business and Economics at University of Hawai'i at Hilo, and Bruce Bird, professor of accounting at Richards College of Business at the University of West Georgia, authored the report on Act 221.