STAND. COM. REP. NO. 2947

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2204
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred H.B. No. 2204, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO ETHANOL,"

begs leave to report as follows:

     The purpose of this measure is to provide an income tax
credit to encourage private sector investment in Hawaii-based
ethanol production facilities.

     Testimony in favor of this measure was submitted by the
Department of Business, Economic Development, and Tourism,
Alexander & Baldwin, Inc., Gay & Robinson, Inc., E D & F Man
Alcohol Inc., Worldwide Energy Group, Inc., and Hawaii Renewable
Energy Alliance.  The Western States Petroleum Association
submitted testimony in opposition.  The Department of Taxation
and Tax Foundation of Hawaii submitted comments.

     Your Committee finds that ethanol production is appropriate
and timely to consider given recent advances in ethanol
production technology, substantial federal tax credits, and the
need to strengthen the economy, particularly in rural areas.

     Your Committee previously heard and approved S.B. No. 2221,
and has amended this measure to reflect the language in S.B.
No. 2221, S.D. 1, which amends the H.D. 2 version to:

     (1)  Make the amount of the credit forty cents;

 
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                                   STAND. COM. REP. NO. 2947
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     (2)  Require that all claims for a tax credit under this
          section be filed on or before the twelfth month
          following the close of the taxable year for which the
          credit is claimed;

     (3)  Authorize the director to adopt rules pursuant to
          chapter 91, Hawaii Revised Statutes; and

     (4)  Make technical amendments for the purpose of style.

     Your Committee further amended the measure by adding a
provision to limit a taxpayer's eligibility for the credit to
five years.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 2204, H.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B.
No. 2204, H.D. 2, S.D. 1, and be referred to the Committee on
Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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