STAND. COM. REP. NO. 820

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1583
                                        S.D. 2




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. 1583, S.D. 1, 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 a tax incentive for technology training or job
          creation;

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

     (4)  Integrates high technology with Hawaii's tourism and
          marketing industries;

     (5)  Prohibits the imposition of taxes on Internet commerce;


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

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

     (8)  Accelerates high speed access to the Internet for the
          University of Hawaii and the public schools, and
          establishes educational technology programs within
          public schools.

     Testimony in support of this measure was submitted by the
Department of Education, the University of Hawaii, and the High
Technology Development Corporation.  The Department of Business,
Economic Development, and Tourism and the Ohana Foundation
submitted testimony in support of the intent of this measure.
Testimony in opposition to this measure was submitted by the
Department of Taxation.  In addition, the Tax Foundation of
Hawaii submitted informational testimony regarding this measure.

     Your Committee strongly believes in the necessity of this
measure.  In the past, Hawaii's economy was at a disadvantage
because of its isolation from mainland businesses and other
international ventures.  Currently, with the advances of
telecommunications, information technology, and the explosive
growth of the Internet, geographic isolation is no longer a
factor, as commerce and businesses are becoming increasingly
global.  Hawaii must foster the growth of high technology
industries in the State in order to take full advantage of the
global economy.  It is only through the development of a strong
high technology sector that Hawaii can diversify its tourism-
dependent economy and grow and prosper in the twenty-first
century.

     Your Committee has amended this measure by:

     (1)  Changing the sunset date of the Internet Tax Freedom
          Act from January 1, 2005, to January 1, 2002.  This
          makes the sunset of Hawaii's Internet Tax Freedom Act
          more consistent with the sunset of the Federal Internet
          Tax Freedom Act, and minimizes any confusion caused by
          conflicting state/federal regulations; and

     (2)  Making technical, nonsubstantive amendments for the
          purpose of clarity.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your

 
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Committee is in accord with the intent and purpose of S.B.
No. 1583, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as S.B. No. 1583,
S.D. 2.

                                 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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