STAND. COM. REP. NO. 689

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1245
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 1245 entitled: 

     "A BILL FOR AN ACT RELATING TO THE INCOME TAXATION,"

begs leave to report as follows:

     The purpose of this measure to allow a state income tax
deduction for one-hundred percent of business meals and
entertainment expenses and club dues.

     Testimony in support of this measure was received from
Outrigger Hotels and Resorts, Legislative Information Services of
Hawaii, Bernard's New York Deli, Inc., and the National
Federation of Independent Business.  The Tax Foundation of Hawaii
submitted testimony commenting on the measure.  The Director of
Taxation submitted testimony in opposition to this measure.

     Your Committee finds that this measure will provide an
incentive for businesses to expend more money entertaining their
clients thereby increasing economic activity and creating more
business and employment opportunities.  The Hawaii businesses in
the restaurant and food service industries will especially
benefit from this measure because additional revenues generated
by increased entertainment and dining spending will be available
for employee and improvement expenditures.

     Your Committee has amended this measure by making technical,
nonsubstantive measures for purposes of clarity and preferred
drafting style.

 
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                                   STAND. COM. REP. NO. 689
                                   Page 2



     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B.
No. 1245, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 1245, S.D. 1, and
be placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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