STAND. COM. REP. NO. 1071

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 838
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No.
838 entitled: 

     "A BILL FOR AN ACT RELATING TO LEASED EMPLOYEES AND
     EMPLOYERS OF LEASED EMPLOYEES,"

begs leave to report as follows:

     The purpose of this bill is to exempt from the general
excise tax amounts received by employee leasing companies that
are passed through as leased employees' compensation, so long as
the employee leasing company does not deprive the leased employee
of rights or benefits through contract negotiations between the
employee leasing company and the leasing employer.

     Goodsill Anderson Quinn & Stifel testified in support of
this measure.  The Department of Taxation, the Department of
Commerce and Consumer Affairs, the Department of Labor and
Industrial Relations, the Tax Foundation of Hawaii, and ALTRES,
Inc. commented on this measure.

     Your Committee has amended this bill by:

     (1)  Establishing license requirements for any person who
          engages in or offers employee leasing services in the
          State; and

     (2)  Making technical, nonsubstantive amendments for clarity
          and style.


 
 
                                 STAND. COM. REP. NO. 1071
                                 Page 2

 
     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
838, as amended herein, and recommends that it pass Third Reading
in the form attached hereto as H.B. No. 838, H.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair