Governor may veto bill that changes sunset date on high-tech tax credit

Governor may veto bill that changes sunset date on high-tech tax credit
David Watumull
David Watumull

By Jim Mendoza - bio | email

SALT LAKE (HawaiiNewsNow) - Chemists at Cardax Pharmaceuticals have their hands on a new class of compounds the company says could address the underlying causes of most chronic diseases.

"Our compounds go to those organs, target that inflammation, and we think solve the problem," president and CEO David Watumull said.

But a new concern has more to do with substance than science. It's the tax credits high-tech companies in Hawaii like Cardax have used as incentives for outside investors under Act 221.

Senate Bill 2001 would accelerate the end date - moving it up from the end of the year.

"This bill shortens the time frame and eliminates the tax credit for investors as of May 1," Watumull said. "It makes it very hard for investors across the country and even in Hawaii to believe in the state's promises to these people."

The bill is on the governor's list of potential vetoes.

"If she does veto it it means that investors could still get at least a portion of the credit that they could have gotten before on investments made after May 1 through the end of this year," Watumull said.

But there's a catch. The bill also extends the deadline for credit that companies like Cardax can take on money they spend for research and development. Instead of December 31, 2010, the deadline would extend to the end of 2011.

Watumull said that R-and-D credit is twenty cents on the dollar.

If the bill gets vetoed the credit goes away at the end of this year.

"Our company and every other company that actually spends money on research and development in Hawaii can benefit from that," Watumull said.

The challenge is Cardax and other hi-tech and bio-tech companies need to attract investment money to spend on research and development.  So if the bill gets passed that money may be as hard to find as a cure for the common cold.

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