STAND. COM. REP. NO. 1042-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2289
                                     S.D. 2




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

Sir:

     Your Committees on Economic Development and Business
Concerns and Consumer Protection and Commerce, to which was
referred S.B. No. 2289, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO PREPAID TELEPHONE CALLING
     SERVICE,"

beg leave to report as follows:

     The purpose of this bill is to clarify that a general excise
tax on prepaid telephone calling services is imposed at the point
of sale.

     The Department of Taxation, AT&T, and GTE Hawaiian Telephone
Company Incorporated testified in support of this bill.  The Tax
Foundation of Hawaii offered comments on this bill.

     Your Committees find that telephone carriers currently
charge consumers with a public service company tax and the
general excise tax when a prepaid calling card is used, while
some retailers charge consumers the general excise tax on the
sale of the cards.  Therefore, some consumers are taxed twice,
when the card is purchased and when used.  This bill eliminates
double taxation by imposing the general excise tax on prepaid
telephone calling services at the point of sale to the consumer.


 
 
 
 
 
 
                                 STAND. COM. REP. NO. 1042-00
                                 Page 2

 
     As affirmed by the records of votes of the members of your
Committees on Economic Development and Business Concerns and
Consumer Protection and Commerce that are attached to this
report, your Committees are in accord with the intent and purpose
of S.B. No. 2289, S.D. 2 and recommend that it pass Second
Reading and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Economic
                                   Development and Business
                                   Concerns and Consumer
                                   Protection and Commerce,

                                   
                                   
                                   
                                   
______________________________     ______________________________
RON MENOR, Chair                   ROBERT N. HERKES, Chair