STAND. COM. REP. NO. 2956

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2760
                                        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 Education and Technology, to which was
referred H.B. No. 2760, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO THE COLLEGE SAVINGS PROGRAM,"

begs leave to report as follows:

     The purpose of this measure is to amend chapter 256, Hawaii
Revised Statutes, to provide clear guidance for the
implementation of the college savings program (Program) and to
bring the statute within the safe harbor provision of the federal
tax code.

     Testimony in support of the measure was received from the
Department of Taxation, Department of Budget and Finance,
University of Hawaii, and TIAA/CREF.  Comments on the measure
were received from the Tax Foundation of Hawaii.

     The Program was established by Act 81, Session Laws of
Hawaii 1999, to enable families to benefit from tax incentives
provided for qualified state tuition programs under the Internal
Revenue Code.  Under this program, money can be placed in a
savings account for the purpose of meeting college expenses of a
designated beneficiary.  The tax benefit is that earnings in
these accounts are not subject to either federal or state taxes
until withdrawal for education expenses.  When withdrawn, the
income tax rate of the student applies, which is normally lower
than the parents' tax rate.


 
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                                   STAND. COM. REP. NO. 2956
                                   Page 2


     Your Committee has amended the measure by substituting its
contents with the provisions of S.B. No. 2796, S.D. 1, which
makes technical amendments to the measure.

     As affirmed by the record of votes of the members of your
Committee on Education and Technology that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 2760, H.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B.
No. 2760, 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 Education and
                                   Technology,



                                   ______________________________
                                   DAVID Y. IGE, Chair

 
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