STAND. COM. REP. NO. 2240

                                   Honolulu, Hawaii
                                                     , 2000

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




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Economic Development and Education and
Technology, to which was referred S.B. No. 2409 entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

beg leave to report as follows:

     The purpose of this measure is to exempt certain activities
of call centers from taxation.

     Testimony in favor of this measure was submitted by the
Department of Business, Economic Development, and Tourism,
Department of Taxation, High Technology Development Corporation,
Hawai`i Technology Trade Association, and The Chamber of Commerce
of Hawaii.  The Tax Foundation of Hawaii submitted comments.

     Your Committees find that today's technically advanced
products and services require highly trained customer support
personnel.  Call centers, which use sophisticated call routing
and wideband high speed data lines, provide these support
services with computer-aided design and other engineering
technologies.  Call center operations offer an excellent
opportunity for Hawaii in the ever expanding customer service
market, while Hawaii provides a central location for companies
doing business in the United States and Pacific Rim countries.

     Your Committees have amended this measure to:

     (1)  Amend the definition of "call centers" by adding
          manufacturing companies and excluding telemarketing or

 
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                                   STAND. COM. REP. NO. 2240
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          sales, to follow more closely the definition in
          S.B. No. 2779, S.D. 1, "Relating to State Enterprise
          Zones," recently approved by the Committee on Economic
          Development;

     (2)  Clarify the effective date for the application of gross
          income received by a public service company; and

     (3)  Make technical, nonsubstantive corrections.

     As affirmed by the records of votes of the members of your
Committees on Economic Development and Education and Technology
that are attached to this report, your Committees are in accord
with the intent and purpose of S.B. No. 2409, as amended herein,
and recommend that it pass Second Reading in the form attached
hereto as S.B. No. 2409, S.D. 1, and be referred to the Committee
on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Economic
                                   Development and Education and
                                   Technology,



____________________________       ______________________________
DAVID Y. IGE, Chair                LORRAINE R. INOUYE, Chair

 
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