Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 231
                                     H.D. 2

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


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


begs leave to report as follows:

     The purpose of this bill is to reduce the tax imposed on
certain businesses by:

     (1)  Reducing the income tax rate for corporations,
          regulated investment companies, and real estate
          investment trusts by fifty percent and changing the tax
          brackets to reflect the lowest tax bracket for incomes
          of $50,000 and less; and

     (2)  Reducing the franchise tax rate to 4.72 percent to
          reflect a decrease only in that portion of the tax that
          serves as a substitute for the income tax; and

     (4)  Reducing the alternative tax under the franchise tax by
          fifty percent.

     The Department of Taxation, the Hawaii Business Roundtable,
the Chamber of Commerce of Hawaii, the Hawaii Farm Bureau, the
Honolulu Japanese Chamber of Commerce, and the Oahu Economic
Development Board testified in support of this bill.

     Your Committee has amended this bill by:

                                 STAND. COM. REP. NO. 1061
                                 Page 2

     (1)  Leaving blank the specific percentage amounts for
          discussion purposes; 

     (2)  Deleting language relating to the limitation of the
          dividend deduction for regulated investment companies
          and real estate investment trusts; and

     (3)  Making technical, nonsubstantive changes for style and

     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 H.B. No.
231, H.D. 1, as amended herein, and recommends that it pass Third
Reading in the form attached hereto as H.B. No. 231, H.D. 2.

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

                                   DWIGHT Y. TAKAMINE, Chair