STAND. COM. REP. NO. 1020-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2409
                                     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. 2409, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to exempt certain activities of
call centers from the General Excise Tax and the Public Service
Company Tax.

     The Hawaii Technology Trade Association, Chamber of Commerce
of Hawaii, and Hawaii Technology Development Corporation
testified in support of this measure.  The Department of Taxation
also testified in support of this measure, but deferred to the
Department of Business, Economic Development, and Tourism on the
definition of "call center".  The Tax Foundation of Hawaii
submitted comments on this measure.

     Your Committee has amended this bill by adding provisions
that:

     (1)  Specify the terms and conditions, and the amount of
          qualified improvement tax credits, allowed for
          qualified improvement costs for property designated
          primarily for resort or hotel use by the counties, or
          property in which the primary purpose is for hotel or
          resort use or commercial or recreational use to support
          or service a hotel or resort use;

 
 
                                 STAND. COM. REP. NO. 1020-00
                                 Page 2

 
     (2)  Disallow Transient Accommodations Tax credits from
          qualified improvement costs;

     (3)  Require the Director of Taxation to develop procedures
          for the distribution and share of qualified improvement
          tax credits; and

     (4)  Authorize the Director of Taxation to develop for each
          qualified taxpayer, a plan that phases in over a ten-
          year period, the qualified improvement tax credits
          claimed by the taxpayer under the bill.

     Your Committee further amended the bill by 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. 2409, S.D. 1, as amended herein,
and recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2409, 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