STAND. COM. REP. NO. 365

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1583
                                        S.D. 1




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

Sir:

     Your Committees on Education and Technology and Economic
Development and Labor and Environment, to which was referred S.B.
No. 1583 entitled: 

     "A BILL FOR AN ACT RELATING TO TECHNOLOGY,"

begs leave to report as follows:

     The purpose of this measure is to foster and support the
growth and development of high technology industries in Hawaii. 

     Specifically, this measure:

     (1)  Consolidates the State's high technology agencies,
          divisions, and offices, under the coordination of a
          special advisor for technology development, and creates
          a governor's special advisory council for technology
          development to assist the advisor;

     (2)  Offers tax incentives through technology training or
          job creation tax credits;

     (3)  Offers a tax incentive for investments in qualified
          high technology businesses;

     (4)  Establishes the Hawaii Internet Exchange to serve as a
          catalyst for the development of Internet focused
          businesses;


 
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     (5)  Focuses on work force development programs to ensure a
          pool of technology professionals; and

     (6)  Accelerates high speed access to the internet for the
          University of Hawaii and the public schools.

     Testimony in support of the intent of this measure was
submitted by the University of Hawaii, the Department of
Business, Economic Development, and Tourism, the Department of
Taxation, the High Technology Development Corporation, and
Transoceanic Navigation Company.

     Your Committees strongly believe in the necessity of this
measure.  If Hawaii is truly going to overcome its economic
hardships, and develop and diversify its economy, then the State
must take full advantage of the advances of telecommunications,
information technology, and the explosive growth of the Internet.
This measure attempts to facilitate Hawaii's growth in high
technology industries, and this progress will lead the State
effectively into the twenty-first century.

     Your Committees appreciate the testimony submitted and have
amended this measure to conform with some suggestions from the
University of Hawaii and the Department of Taxation by:

     (1)  Deleting the references to "resident" in section six of
          this measure to better allow for interstate commerce;

     (2)  Replacing, in sections 6 and 7 of this measure, the
          term "technology" with "qualified high technology
          business", and providing a more specific definition of
          this new term to prevent any possible compliance
          problems for taxpayers and administrative difficulties
          for the Department of Taxation; and

     (3)  Establishing the Hawaii Internet Exchange within the
          University of Hawaii Information Technology Services as
          opposed to the Office of Technology Transfer and
          Economic Development.

     Your Committees have further amended this measure to
incorporate additional ideas which are essential to this
measure's effectiveness.  Your Committees have added new sections
which:

     (1)  Foster the development of information based industries
          to enhance Hawaii's tourism industry;


 
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     (2)  Establish a Hawaii Internet Tax Freedom Act, thereby
          prohibiting the imposition of income tax, general
          excise tax, or use tax on Internet electronic commerce
          for five years; and

     (3)  Establish and provide funding for E Academy programs
          statewide, which are devoted to providing students with
          industry and academic standards-based instruction in
          technology, science, math, and engineering.

     As affirmed by the records of votes of the members of your
Committees on Education and Technology and Economic Development
and Labor and Environment that are attached to this report, your
Committees are in accord with the intent and purpose of S.B.
No. 1583, as amended herein, and recommend that it pass Second
Reading in the form attached hereto as S.B. No. 1583, S.D. 1, and
be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Education and
                                   Technology and Economic
                                   Development and Labor and
                                   Environment,



____________________________       ______________________________
LORRAINE R. INOUYE, Chair          DAVID Y. IGE, Chair



____________________________
BOB NAKATA, Chair

 
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