STAND. COM. REP. NO. 918-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2716
                                     S.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. 2716, 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:

     (1)  Specify that the one-half percent general excise tax
          (GET) rate applies to sales by a printer to a publisher
          of magazines or similar printed materials containing
          advertisements, when the publisher is under contract
          with the advertisers to distribute a minimum number of
          magazines or similar printed materials to the public or
          defined segment of the public, whether or not there is
          a charge to the persons who actually receive the
          magazines or similar printed materials; and

     (2)  Exempting such sales from the use tax.

     Hawaii Publishers Association, Honolulu Publishing Company,
Ltd., Trade Publishing Company, Hawaii Society of Certified
Public Accountants, and PMP Publishing Company, Ltd., submitted
testimony in support of this measure.  The Department of Taxation
(DOTAX) and the Tax Foundation of Hawaii submitted comments on
this measure.

     Under current law, a wholesale rate of one-half percent
applies when tangible personal property is sold for resale at

 
 
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                                 Page 2

 
retail.  If the property is not resold, the GET is imposed at the
four percent retail rate.  This bill "levels the playing field"
between printers who sell to publishers who sell their magazines
for a charge versus publishers who distribute their magazines
without charge.

     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. 2716, S.D. 1, and recommends that
it pass Second Reading 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