Monday, August 15, 2022
Hawai'i Free Press

Current Articles | Archives

Monday, March 1, 2021
HB1314: Grabs TAT from Counties
By Tax Foundation @ 8:13 PM :: 1602 Views :: Taxes, Tourism

SUBJECT: TRANSIENT ACCOMMODATIONS, REAL PROPERTY, INCOME, County Surcharge on TAT

Feb, 2021 Tax Foundation Hawaii testimony on HB1314

BILL NUMBER: HB 1314

INTRODUCED BY: YAMASHITA

EXECUTIVE SUMMARY: Authorizes each county to levy a county surcharge on transient accommodations tax if the county satisfies certain real property tax requirements. Repeals the allocation of transient accommodations tax revenue to the counties and makes conforming amendments. Establishes a residential property owner tax credit and a residential circuit breaker tax credit. Beginning with taxable years after 12/31/2021, gradually implements new individual income tax and corporation income tax brackets and rates in 3-year intervals.

SYNOPSIS: Adds a new section to chapter 46, HRS, to authorize counties to adopt a surcharge on TAT, if it meets the following conditions:

• Raise the property tax rates to no less than $5 per $1000 of assessed valuation in 2022; $7.50 in 2025; $10 in 2028; and $15 in 2031.

• Increase the home exemption for property tax to at least $_____.

• Lower the minimum age needed for the home exemption to _____.

Adds a new section to chapter 237D, HRS, regarding administration of the county surcharge on TAT.

Adds a new section to chapter 248, HRS, to provide for a “skim” of 5% of the gross collections of TAT surcharge that will be retained as State general fund realizations.

Amends section 87A-42, HRS, to delete the language mandating sequestration of the county’s share of TAT moneys if the county has not made its required contributions toward Other Post-Employment Benefits for public workers such as pensions (ERS) and health benefits (EUTF).

Amends section 237D-6.5, HRS, to delete the current provision earmarking $103 million annually to the counties.

Adds a new section to chapter 235, HRS, to allow a refundable income tax credit of ___% of the real property tax paid by a qualified taxpayer on no more than the first $1 million of valuation. That section defines “qualified taxpayer” as a resident who pays real property taxes to a county of the State for a residential property that is used as the taxpayer’s principal residence during the taxable year.

Adds a new section to chapter 235, HRS, to establish a refundable residential circuit breaker tax credit equal to ___% of the real property tax owed and paid by a qualified taxpayer. This section defines a “qualified taxpayer” as a resident who (1) Is sixty-five years of age or older; (2) Is not Re: HB 1314 a dependent of another taxpayer; (3) Has a total earned income that is less than $20,000; and (4) Owns and occupies a residential property that is used as a principal residence and the assessed value of the residential property does not exceed $1,000,000.

Amends section 235-51, HRS, to phase out the individual income tax by 2030.

Amends section 235-71, HRS, to phase out the corporate income tax by 2030.

EFFECTIVE DATE: Upon approval.

STAFF COMMENTS: This bill represents an effort to phase out the individual and corporate income taxes by changing the focus to real property and transient accommodations taxes. There are still several blanks in the bill so it is not possible to prejudge the revenue impact, but in the trying times we are now in, we expect that the proponents of this bill are eyeing a net tax increase.

A tax increase of any magnitude in Hawaii’s fragile economy will, no doubt, have a negative impact as costs soar due to higher taxes. As costs and overhead increase, employers must find ways to stay in business by either increasing prices to their customers or cut back on costs. This may take the form of reducing inventory, shortening business hours, reducing employee hours, or even laying off workers. A tax increase of any magnitude would send many companies, especially smaller ones, out of business taking with them the jobs the community so desperately needs at this time.

We observe that the two major taxes collected by the Department of Taxation are now the general excise tax and the individual income tax. According to the DOTAX’s annual report for FY2020, the GET brought in $3.44 billion; the individual income tax brought in $2.36 billion; and all other taxes combined brought in $1.65 billion. To replace the individual and corporate income taxes, the state would have to impose a whopping amount of tax just to stay even. Thus, there will be highly significant economic consequences accomplished by this bill – and most of them will need to come out of something other than the TAT, which is producing barely a trickle of income as the result of COVID-19 decimation of the hospitality industry.

HB1314: Text, Status

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT