Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Economic Development and Technology and Commerce, Consumer Protection and Housing, to which was referred S.B. No. 656 entitled:

beg leave to report as follows:

The purpose of this measure is to accelerate the general excise tax deduction for the leasing and subleasing of real property by adopting the .875 deduction multiplier for calendar year 2002 and thereafter.

Your Committees received testimony opposing this measure from the Department of Taxation and the Department of Budget and Finance. Your Committees received comments from the Tax Foundation of Hawaii.

Your Committees find accelerating the general excise tax deduction would help to stabilize the cost of doing business in the State by eliminating pyramiding as a bias toward higher rents.

Your Committees amended this measure by removing the multiplier percentages for years 2002, 2003, and 2004 in order for the Committee on Ways and Means to determine the appropriate acceleration.

As affirmed by the records of votes of the members of your Committees on Economic Development and Technology and Commerce, Consumer Protection and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 656, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 656, S.D. 1, and be referred to the Committee on Ways and Means.