RELATING TO THE FILM INDUSTRY.
SB732 makes a broad set of changes to Hawaii’s film-industry tax and permitting framework. It requires counties to waive permitting fees for qualifying film activity on county lands, creates a general excise tax exemption for entertainment payroll companies, and adds a separate exemption for motion picture project employers for pass-through amounts paid out for wages, payroll taxes, insurance, benefits, and loan-out company payments. The bill also revises the state’s motion picture, digital media, and film production income tax credit to expand eligibility, tighten reporting, and alter the credit structure.
The bill increases the incentive for productions that use local labor by adding an extra 5 percent credit for qualified productions with at least 80 percent local hires. It also requires productions to contact all local labor unions serving Hawaii’s film industry, expands the definition of qualified productions to include certain broadcast and streaming platform projects, and requires productions with more than $1 million in qualified costs to submit CPA certification instead of a tax opinion. In addition, it changes the annual credit cap structure, phasing the cap down by one-sixth beginning in 2028, and sets the credit and several related provisions to sunset or be repealed on January 1, 2033.
The bill would amend multiple chapters of the Hawaii Revised Statutes, including county permitting authority under chapter 46, general excise tax provisions under chapter 237, and the income tax credit statute in chapter 235. It removes an existing income tax exemption for persons engaged in motion picture and television film production, adds new GET exemptions for entertainment payroll companies and motion picture project employers, and revises the film production credit’s eligibility, administration, and definitions. It also updates the tax treatment of production activity by expressly including production in the manufacturer tax provisions and by expanding the credit to cover broadcast and streaming platform content. Several provisions are temporary and are scheduled to expire or be reenacted in 2033, so the bill would significantly reshape but not permanently replace the current film incentive structure.
The available voting history suggests strong support in the Senate, with unanimous passage in both the Senate Economic Development and Technology Committee and the Senate Ways and Means Committee, each passing the bill with amendments. The bill’s structure and report title indicate a generally pro-industry approach aimed at supporting Hawaii’s film sector, local hiring, and related payroll infrastructure. No committee transcript excerpts were provided, so there is no recorded floor or committee debate to indicate organized opposition in the supplied materials.
The main policy tensions appear to be between expanding film-industry incentives and imposing additional conditions and administrative requirements. Supporters likely favor the local-hire bonus, union-contact requirement, county fee waivers, and broader eligibility for streaming and broadcast productions as tools to keep more production spending in Hawaii. Potential points of contention include the cost of the expanded credit, the phased cap reduction and sunset structure, the repeal of the existing production income tax exemption, and the added compliance burdens such as CPA certification, union outreach, and detailed workforce reporting. Counties may also be affected by the mandatory waiver of permitting fees, which shifts revenue impacts to local governments.