STAND. COM. REP. NO. 1033-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2781
                                     S.D. 2
                                     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. 2781, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to replace the qualified
improvement tax credit established by Act 306, Session Laws of
Hawaii (SLH) 1999, with a four per cent tax credit for specified
hotel construction and remodeling for taxable years beginning
after December 31, 1998, and before January 1, 2001.

     The Department of Taxation, Land Use Research Foundation of
Hawaii, Subcontractors Association of Hawaii, American Institute
of Architects, Hawaii Resort Developers Conference, Hawaii Hotel
Association, American Resort Development Association of Hawaii,
Plumbers and Fitters Local 675, Department of Business, Economic
Development, and Tourism, Hilton Hawaiian Village, Hidano
Construction, and Waikiki Improvement Association testified in
support of this bill.  The Chamber of Commerce of Hawaii, Hawaii
Construction Industry Association, Hawaii Tourism Authority,
Building Industry Association of Hawaii, Retail Merchants of
Hawaii, National Federation of Independent Business, Visitor
Industry Coalition, and Outrigger Hotels and Resorts supported
the intent of this bill.  The Tax Foundation of Hawaii offered
comments.  The Hawaii Chapter of the Sierra Club testified in
opposition to this bill.


 
 
                                 STAND. COM. REP. NO. 1033-00
                                 Page 2

 
     Your Committee has amended this bill by:

     (1)  Restricting the credit from applying to taxable years
          beginning after December 31, 2006;

     (2)  Leaving the effective date blank; and

     (3)  Making technical, nonsubstantive amendents for purposes
          of style and clarity.

     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. 2781, S.D. 2, as amended herein,
and recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2781, S.D. 2, 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