A study commissioned by a group opposed to a Native Hawaiian government within the United States estimates it would cost the state of Hawai'i hundreds of millions of dollars.

The libertarian Grassroot Institute of Hawai'i's study released yesterday predicts a Native Hawaiian government would snatch public land and up to $690 million in state tax revenues per year.

But the Office of Hawaiian Affairs said the report "is based on fear and spreads misinformation," because the Native Hawaiian legislation pending before Congress doesn't provide for land transfers or tax breaks.

The $15,000 study was conducted by the public policy think tank Beacon Hill Institute at Suffolk University.

It assumes residents and businesses of a future Native Hawaiian government would be exempt from state income and excise taxes, similar to reservations of American Indians.

"We're going to have a nation carved out of the state of Hawai'i, and we don't know the impact," said Dick Rowland, co-founder of the Grassroot Institute. "It's frightening."

A spokesman for Sen. Daniel Akaka, D-Hawai'i, who is pushing the measure in Congress, said the legislation only spells out a method to create an entity that would represent Hawaiians to the U.S. government.

"Part of the point of the Akaka bill is not to dictate what will happen, but set up a process ... so future leaders can make the decisions themselves," spokesman Jesse Broder Van Dyke said.

The measure would set up a Native Hawaiian governing body that would then negotiate with the federal government to determine its powers and land base. These lands could come from 1.2 million acres once owned by the Hawaiian monarchy and now managed by the state.

The Office of Hawaiian Affairs accused the Beacon Hill Institute of being biased and affiliated with "radical neo-conservatives."