Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 206
                                     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. 206 entitled: 


begs leave to report as follows:

     The purpose of this bill is to redefine "cooler beverage" to
mean any liquor containing less than seven per cent of alcohol by
volume and added natural or artificial blending material, such as
fruit juices, flavors, flavorings, or adjuncts, water (plain,
carbonated or sparkling), colorings, or preservatives.

     The effect of the bill is to treat low-alcohol pre-mixed
beverages equally for tax purposes, regardless of whether the
alcohol base is beer, wine or distilled spirits. 

     Testimony in support of this bill was received from the
Distilled Spirits Council of the United States (DISCUS), the
Retail Liquor Dealers Association (RLD), and the Tax Foundation
of Hawaii.  Mothers Against Drunk Driving (MADD), the Department
of Taxation, and the Wine Institute submitted testimony opposing
the bill.

     Supportive testimony pointed out the unfairness of the
current law which taxes wine and malt beverage coolers at $0.85
per wine gallon, while subjecting equally low-alcohol spirit
coolers to a tax of $5.98 per wine gallon.  RLD further testified
that current law favors the wine and malt beverage industry, not
the consumer.  DISCUS estimated that there is an estimated liquor

                                 STAND. COM. REP. NO. 379
                                 Page 2

tax revenue loss of $400,000 because the result of the high tax
on spirit coolers is that these beverages are not now being sold
in Hawaii.   

     Your Committee concurs with the supporting testimony and
also sees benefits to consumers in terms of choices and pricing
in the marketplace.  Your Committee has made a technical,
nonsubstantive amendment to the bill for purposes of clarity.

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

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

                                   RON MENOR, Chair