LT. GOVERNOR AIONA VETOES SUSPENSION OF HIGH-TECH TAX CREDITS

HONOLULU — Lt. Governor James R. “Duke” Aiona, Jr., as acting governor, today vetoed Senate Bill 2401, which would have suspended the Act 221 investment and infrastructure renovation tax credits for three years.

Currently, Act 221 provides a 100 percent non-refundable credit for investments in qualified high-technology businesses. Individuals and companies that make these investments can claim the credit against their income taxes over a five-year period under the following schedule:  35 percent the first year, 25 percent the second year, 20 percent the third year and 10 percent the fourth and fifth years.

“This bill would damage Hawai‘i’s reputation as a place to do business,” said Lt. Governor Aiona. “It will discourage individuals and companies from investing in our state by changing the rules with little notice or rationale.”

Numerous businesses and individuals testified against the bill stating potential investors are waiting to see what happens with this measure before deciding to invest in current or new ventures in Hawai‘i. Several small businesses also testified that the pool of capitol for their firms has dried up and they may face closure and more layoffs if the bill becomes law.

In 2009, Hawai‘i was ranked 42nd in the nation in an assessment of its state business climate by the Small Business and Entrepreneurship Council. Senate Bill 2401 would have added to that negative perception by further making Hawai‘i’s tax laws unfriendly to businesses and investors.

Advantage Capital Partners, a venture capital firm based in St. Louis, Missouri, that issues tax credit bonds which include portions of Act 221 credits, has written the State the credit suspension will lead to a downgrade of these bonds from investment grade to junk.

In addition, it was uncertain whether the revenues from this measure could have been counted toward the State budget because a number of investors and businesses have stated their intent to challenge this measure in court if it became law. Their additional tax payments under this measure would have likely been transferred to the Litigated Claims Fund until all matters were resolved.

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RELATED: AIONA: Developing Hawai‘i’s high-tech industries, Acting Governor Duke Aiona signs Monk Seal Protection bill

STATEMENT BY LYNN FINNEGAN ON SB2401 VETO

HONOLULU - State House Minority Leader Representative Lynn Finnegan, candidate for Lt. Governor, released the following statement about Lt. Governor Aiona's veto of SB2401: 

"In his capacity as acting governor, Lt. Governor Duke Aiona showed his strong support for local businesses by vetoing Senate Bill 2401, which would have suspended Act 221 investment and infrastructure renovation tax credits for three years.  

“Hawai`i’s economic recovery is in a very fragile state. Our state cannot afford bills that discourage investment in Hawai`i businesses and add to Hawai`iʻs negative business reputation. Our economic revitalization is dependent on diversifying and transforming our economy to one which fosters innovation and gives businesses incentives to think outside-the-box.  SB2401 was a game changer for many Hawai`i businesses and their investors who strengthen Hawai`i’s economy with funds from around the world.

“By vetoing the measure, Lt. Governor Aiona assured businesses that the Executive Branch of government is working to keep Hawai`i open for business." 

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MEDIA ADVISORY: Lt Gov candidate Adrienne King backs Veto

(Honolulu, Hawaii),  June 9, 2010---Adrienne S. King, candidate (R) for Lt. Governor issued a statement today supporting acting Governor, Lt. Governor James “Duke” Aiona's veto today of the bill that would have suspended for 3 years Act 221, which Act allows 100% non-refundable credit for investments in qualified high-tech businesses.  

Adrienne agreed with Lt. Governor Aiona that suspension of Act 221 would have negatively impacted those businesses and investors who already committed money for job creation in the high-tech industry here in Hawaii.  "The suspension of Act 221 would have sent, again, another message to investors that Hawaii is closed to business," shared Adrienne King, an official "Tea Party" sponsor and supporter.

King praised the veto adding, "Gubernatorial candidate Lt. Governor Aiona understands the implications and consequences such legislation would have had on job growth, which seems to have escaped the bill's supporters. It was absolutely the right thing to do and I support him wholeheartedly."

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