STAND. COM. REP. NO. 816

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1325
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 1325, entitled:

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a new tax credit
for hotel construction and remodeling for tax years 1999 to 2001.

     Your Committee received testimony in support of this measure
from the Department of Business, Economic Development, and
Tourism, the Department of tAxation, the Maui Hotel Association,
the Waikiki Improvement Association, and Outrigger Enterprises.
The Tax Foundation of hawaii submitted comments.

     Your Committee finds that Act 108, Session Laws of Hawaii
1997, established a hotel remodeling tax credit for tax years
1997 and 19098,m to encourage owners to refurbish, repair, and
renovate their facilities.  This measure provides a similar tax
credit to replace the expiring credit.

     Your Committee further finds that this measure has expanded
the original tax credit to allow an association of apartment
owners of a hotel-condo as defined in section 486K-1, Hawaii
Revised Statutes, to claim the credit, and to allow persons who
take the credit, the option of treating the credit as taxable
income or reducing the basis of the property by the amount of the

 
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                                   STAND. COM. REP. NO. 816
                                   Page 2


credit.  In addition, there is no cap on the tax credit in this
measure, thus, increasing its value.

     Your Committee believes this measure will help to revitalize
Hawaii's tourism industry as well as the overall economy.  Your
Committee has amended this measure to change the end date for the
tax credit from before December 31, 2001, to before January 1,
1902, correcting the one day loss and to make technical,
nonsubstantive amendments.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attache dot this report, your
Committee is in accord with the intent and purpose of S.B. No.
1325, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 1325, S.D. 1, and
be placed on the calendar to Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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