STAND. COM. REP. NO. 916-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2160
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development and Business
Concerns, to which was referred S.B. No. 2160, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO GENERAL EXCISE TAX,"

begs leave to report as follows:

     The purpose of this bill is to provide tax relief for the
construction industry by allowing contractor-taxpayers to pay the
general excise tax (GET) on a cash basis, provided that the
contractor-taxpayer notifies the Department of Taxation (DOTAX)
of the basis upon which the GET will be reported.

     The Construction Industry Legislative Organization, Building
Industry Association of Hawaii, Subcontractors' Association of
Hawaii, Hawaii Construction Industry Association, Associated
Builders and Contractors, Inc., General Contractors Association
of Hawaii, and Plumbing & Mechanical Contractors Association of
Hawaii submitted testimony is support of this measure.  DOTAX and
the Tax Foundation of Hawaii submitted comments on this measure.

     Your Committee notes that this bill is similar to H.B. No.
2876, H.D. 2, which passed the House of Representatives earlier
this session after public hearings before this Committee and the
Committee on Finance.

     Your Committee has made amendments to conform this bill to
H.B. No. 2876, H.D. 2, by:


 
 
                                 STAND. COM. REP. NO. 916-00
                                 Page 2

 
     (1)  Providing a purpose section;

     (2)  Allowing the reporting of the GET on a cash basis to be
          noncontingent on the definition of "gross income" under
          section 237-3, Hawaii Revised Statutes;

     (3)  Stipulating that the bill applies to general excise
          taxes on gross proceeds or gross income arising after
          January 2, 2001; and

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

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of S.B. No. 2160, S.D. 1, as amended herein,
and recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2160, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair