CONFERENCE COMMITTEE REPORT NO.117

                            Honolulu, Hawaii
                                            , 2000

                            RE:   S.B. No. 2781
                                  S.D. 2
                                  H.D. 2
                                  C.D. 1




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

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

Sir:

     Your Committee on Conference on the disagreeing vote of the
Senate to the amendments proposed by the House of Representatives
in S.B. No. 2781, S.D. 2, H.D. 2, entitled:  

     "A BILL FOR AN ACT RELATING TO TAXATION," 

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

     The purpose of this bill is to enact a hotel construction
and remodeling income tax credit and to repeal the qualified
improvement tax credit.

     Your Committee finds that the hotel industry, which includes
hotel condominiums and time share plans, needs state assistance
to add new stock or to renovate the current stock.  The purpose
of this bill is to provide that assistance.  In addition, your
Committee finds that attracting call centers to the State will
provide more employment for our citizens and will encourage a
clean industry that involves technology in Hawaii.


 
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     Upon further review of this bill, your Committee has amended
the bill to:

     (1)  Provide that a taxpayer instead of reducing the basis
          of eligible property may report the credit as income in
          the appropriate year;

     (2)  Change the time period for ending the credit to
          December 31, 2002, and provide that the period begins
          for projects after December 31, 1998;

     (3)  Remove the requirement that a qualified project has a
          cost that exceeds $1,000,000;

     (4)  Add a definition of taxpayer to include associations of
          apartment owners and time share associations;

     (5)  Make the tax credit refundable; and

     (6)  Provide that no taxpayer may claim a credit under this
          bill and a credit under chapter 235D, Hawaii Revised
          Statutes (HRS).

     Your Committee notes that its intention is to also pass
Senate Bill No. 2409 in an amended form to provide an alternative
qualified improvement tax credit that will amend chapter 235D,
HRS, enacted last year.  Your Committee finds that such an
alternative is appropriate and will provide taxpayers with
options that would not otherwise be available.

     In addition, your Committee has added an exemption of call
centers from the general excise and public service company tax to
this bill to encourage the formation of clean, technology
businesses in Hawaii.  Your Committee believes that the package
of tax incentives in this bill will encourage the economy of the
State.

     As affirmed by the record of votes of the managers of your
Committee on Conference that is attached to this report, your
Committee on Conference is in accord with the intent and purpose
of S.B. No. 2781, S.D. 2, H.D. 2, as amended herein, and
recommends that it pass Final Reading in the form attached hereto
as S.B. No. 2781, S.D. 2, H.D. 2, C.D. 1.


 
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                                   Respectfully submitted on
                                   behalf of the managers:

  ON THE PART OF THE HOUSE           ON THE PART OF THE SENATE




_____________________________     _______________________________
Rep. ROBERT N. HERKES             Sen. LORRAINE R. INOUYE
Co-Chair                          Co-Chair



_____________________________     _______________________________
Rep. DWIGHT TAKAMINE              Sen. CAROL FUKUNAGA
Co-Chair                          Co-Chair



                                  _______________________________
                                  Sen. ANDREW LEVIN
                                  Co-Chair

 
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