Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Economic Development and Business Concerns, to which was referred S.B. No. 2242, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to remove tax barriers to the reorganization of the business structure of professional medical services firms that wish to establish an employee stock ownership plan.

The Legislative Information Services of Hawaii, Clinical Laboratories of Hawaii, LLP, and a concerned individual submitted testimony in support of this measure. The Department of Taxation (DOT) supported the intent of this measure. The Tax Foundation of Hawaii offered comments.

Your Committee recommends DOT to work with the proponents of this measure to further specify conditions for obtaining exemptions to the general excise tax.

Your Committee has amended this bill by:

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. 2242, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2242, S.D. 1, H.D. 1, and be referred to the Committee on Finance.