Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1076

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


     Your Committee on Ways and Means, to which was referred S.B.
No. 1076 entitled: 


begs leave to report as follows:

     The purpose of this measure is to allow insurance companies
to offset their insurance premium taxes with the low-income
housing tax credit provided by Section 235-110.8, Hawaii Revised

     Testimony in support of this measure was received from the
Department of Taxation, the Housing and Community Development
Corporation of Hawaii, and the Department of Commerce and
Consumer Affairs.  The Tax Foundation of Hawaii provided

     Currently, resident taxpayers, banks, and financial
institutions may take the low-income housing tax credit by
deducting from their net income tax liability, a credit equal to
thirty percent of the applicable percentage of the qualified
basis of each low-income building located in Hawaii.  
     Your Committee finds that this measure would encourage the
inflow of capital into Hawaii by providing insurance companies
the same incentives enjoyed by individuals and financial
institutions to invest in low-income housing projects.

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                                   STAND. COM. REP. NO. 732
                                   Page 2

     Your Committee finds that allowing insurance companies to
utilize the tax credit will increase demand for such credits,
which will result in investors paying a higher price for the
credits.  The higher price paid for the credits would result in
the Housing and Community Development Corporation of Hawaii
having to award less tax credits to low-income rental projects
and would therefore "stretch" the credits further and provide an
increased amount of low-income rental units.  In addition, the
total amount of the credit claim will not increase since it is
fixed by federal law.

     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. 1076 and recommends that it pass Third Reading.

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

                                 CAROL FUKUNAGA, Co-Chair

                                 ANDREW LEVIN, Co-Chair

a                                                     SB1076