STAND. COM. REP. NO. 1399-00

                                 Honolulu, Hawaii
                                                   , 2000

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




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

Sir:

     Your Committee on Finance, to which was referred S.B. No.
2781, S.D. 2, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to:

     (1)  Repeal the Qualified Improvement Tax Credit established
          by Act 306, Session Laws of Hawaii 1999;

     (2)  Establish, in place of the Qualified Improved Tax
          Credit, the Hotel Construction and Remodeling Tax
          Credit (Tax Credit).  If costs exceed $1,000,000 per
          project, a qualified taxpayer would be allowed to take
          a four percent income tax credit for construction and
          remodeling costs that are incurred for the qualified
          hotel/condo and time share project in Hawaii; and 

     (3)  Makes the Tax Credit available for taxable years
          beginning after December 31, 1998, through December 31,
          2006.

     The Department of Taxation, the Consulting Engineers Council
of Hawaii, the Hawaii State Council of the American Institute of
Architects, the Subcontractors' Association of Hawaii, the
General Contractors Association of Hawaii, Pahio Resorts, the
Land Use Research Foundation of Hawaii, the Waikiki Improvement

 
 
                                 STAND. COM. REP. NO. 1399-00
                                 Page 2

 
Association, the Hilton Hawaiian Village, the Hawaii Hotel
Association, the Pacific Resource Partnership, Paul Louie &
Associates, Inc., the Hawaii Developers' Council, Hawaii Resort
Developers Conference, Visitor Industry Coalition, and an
individual testified in support of this measure.

     The Hawaii Tourism Authority, the Retail Merchants of
Hawaii, the Hawaii Construction Industry Association, and the
Chamber of Commerce of Hawaii supported the intent of this bill.

     The Department of Business, Economic Development, and
Tourism, the American Resort Development Association of Hawaii,
the ILWU Local 142, Hidano Construction, Inc., Tax Foundation of
Hawaii, the Construction Industry Legislative Organization, and
the Plumbers/Fitters Union Local 675 submitted comments.

     Your Committee has amended this measure by:

     (1)  Allowing any developer of a time share project to
          qualify for the Tax Credit;

     (2)  Specifying that to qualify for the Tax Credit, the
          taxpayer must be in compliance with all applicable
          federal, state, and county statutes, rules, and
          regulations;

     (3)  Changing the effective date to July 1, 2005, to
          facilitate further discussion; and

     (4)  Making technical, nonsubstantive amendments for
          purposes of clarity and style.

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

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair