TAX NEWS - June 2010
Hawaii Tax: Hawaii technology tax credit suspension vetoed
Aiona, who is acting governor while Gov. Linda Lingle travels to Asia for two weeks, said the measure was "ill-conceived" and would made it more difficult for the state's tourism-dependent economy to recover.
"It will damage Hawaii's reputation as a place to do business," Aiona said at a news conference. "This creates uncertainty in Hawaii's marketplace and makes it harder for investors to assess the risk of doing business in our state."
The bill would have prevented anyone from claiming a tax credit on their high-tech investments until 2013.
Aiona didn't act on a second bill that would have brought forward to May the last date by which people would have had to make high-tech investments to claim the tax credit.
Under the current law, Dec. 31 is the last day such investments may be made.
Aiona said the Lingle administration is still considering what action to take on that measure.
Hawaii adopted the tax credits to spur investment in high-technology and diversify the economy. But the state House and Senate passed bills disrupting the credits during this year's Legislative session to raise funds to close a projected $1 billion budget deficit through June 2011.
Aiona said the Lingle administration expects higher tax revenues to substitute for the revenue lawmakers hoped to raise with the legislation suspending the tax credits.
He noted the state Council on Revenues recently raised its revenue forecast for the next fiscal year by $297 million.
The state Department of Taxation forecast the tax credit suspension bill would have raised $93 million in the fiscal year beginning July 1 and a cumulative $167 million in the three years through 2013.
The department also predicted, however, that the state would have had revenue losses of $84 million in fiscal 2014 and 2015, as investors rushed to claim tax credits they had been prevented from claiming for three years.
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