STAND. COM. REP. NO. 599________

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 1026
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 1026 entitled: 


begs leave to report as follows:

     The purpose of this bill is to allow insurance companies to
offset their insurance premiums with the low-income housing tax
credit provided under the income tax law.

     This bill extends the low-income housing income tax credit
provided under the income tax law to the insurance premium tax
imposed under the insurance law.  The taxation of insurance
premiums is not included in the income tax law, so insurance
companies are not currently offered this incentive to develop
low-income housing.

     Your Committee heard testimony from the Housing and
Community Development Corporation of Hawaii, and the Department
of Taxation in support of the bill.  The Department of Commerce
and Consumer Affairs had no objections to the measure and the Tax
Foundation of Hawaii submitted comments to your Committee.

     Your Committee finds that this bill will encourage the
inflow of capital into Hawaii.  Providing insurance companies the
same incentives that other corporations and financial
institutions already enjoy will increase the interest in

a                                                         99-1767
                                 STAND. COM. REP. NO. 599________
                                 Page 2

investing in low-income housing.  Your Committee also finds that
the structure of the credit will not increase the amount of tax
credits provided by the State.  It is anticipated that the same
amount of credits will be stretched further and result in an
increased number of low-income rental units.

     Your Committee has amended this bill to clarify that the
credit applies to insurance premium taxes rather than income

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1026, as amended herein, and recommends that
it be referred to the Committee on Finance, in the form attached
hereto as H.B. No. 1026, H.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,

                                   RON MENOR, Chair

a                                                         99-1767