by Frances Nuar, Grassroot Institute
The desperate dance to balance the state budget was trickier than ever this legislative session. Far from providing innovative solutions, the Democratic led legislature had one answer to solve the $1.2 billion budget deficit: tax, tax, and tax some more, to the tune of $600 million.
Proposals to raise the general excise tax 25 percent fell through after stiff opposition from both businesses and individuals, both determined to maintain the already high cost of living at the status quo.
Yet opponents to the general excise tax increase didn’t claim complete victory. Senate Bill 754 suspended GET exemptions on many businesses, a de facto tax hike sure to be felt by both businesses and consumers. Given the anti-business climate in Hawaii, most businesses already operate at very low profit margins. Businesses must pass added costs on to consumers to stay viable, further increasing the already high cost of living.
Among the GET exemptions withdrawn was on any business involved in the “loading or unloading of cargo.” Given the geographical realities of Hawaii, this will necessarily translate into higher prices on all commodities, almost all of which are shipped in.
Senate Bill 570 caps itemized deductions and eliminates the deduction for state taxes for incomes over $100,000 per year for individuals or $200,000 per year for a joint return. Repealing the deduction increases the amount of income subject to the state income tax, resulting in an even higher tax bill.
The list of tax increases only continues:
Senate Bill 1328 raises the annual vehicle registration fee from $25 to $45, while Senate Bill 1329 raises the annual state vehicle weight tax a dollar per pound on average size cars, from 0.75 to 1.75 cents. These bills combined will add almost $60 to the average registration bill.
For those that do not own a car and rent as needed, House Bill 1039 will raise the rental vehicle taxes from $2 to $7.50 per day. Traditionally designated entirely to the state highway fund, $4.50 of the tax hike will be directed to the general fund.
Senate Bill 1186 applies a daily Transient Accommodation Tax of $10 to rooms provided for no charge, whether complimentary or earned as part a rewards program.
These $600 million in increased taxes come even while state legislators might be finagling a pay raise for themselves—if House Bill 575 is vetoed on constitutionality grounds, legislators would get 12 percent pay raises, administrators 17 percent, and judges a 28.5 percent increase in salary.
Governor Abercrombie promised “A New Day in Hawaii”. Seems like business is same old, same old.