STAND. COM. REP. NO. 611

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 741
                                     H.D. 1




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

Sir:

     Your Committee on Economic Development and Business
Concerns, to which was referred H.B. No. 741 entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to restructure various tax
provisions to promote fairness to taxpayers.  Specifically, this
bill will:

     (1)  Exempt food and drugs from the general excise tax;

     (2)  Remove the pyramiding of the general excise tax on
          services;

     (3)  Exempt export services from the general excise tax; and

     (4)  Hasten the removal of pyramiding on subleased real
          property.

To offset the cost of these measures, this bill will raise the
general excise tax rate from four to five percent.

     Your Committee has amended this bill by deleting the
provisions relating to:

     (1)  Exempting food and drugs from the general excise tax;


 
 
 
                                 STAND. COM. REP. NO. 611
                                 Page 2

 
     (2)  Hastening the removal of pyramiding on subleased real
          property; and

     (3)  Raising the general excise tax to five percent.

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of H.B. No. 741, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 741, H.D. 1, and be referred to the Committee
on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair