Grassroot Institute urges Maui Council to reject higher tax burden

A proposed 0.5% county surcharge added to the state's 4% rate would jack up the cost of living, cost jobs and harm productivity

from Grassroot Institute, June 25, 2023

The Grassroot Institute of Hawaii urged the Maui County Council on Tuesday to reject adding a 0.5% county surcharge to the state’s 4% general excise tax to fund housing infrastructure, saying it would do far more harm to residents than good.

Maui County, to its credit, is the lone county without a GET surcharge.

Joe Kent, Grassroot Institute executive vice president, said in written testimony regarding Bill 49 (2023) that the proposed tax increase would do little, if anything, to resolve the county’s housing crisis, yet would probably worsen its existing healthcare challenges and definitely increase its cost of living and hurt the county’s economy.

Kent said the new tax would cost the county between 200 and 280 jobs and up to $49 million in economic output, according to an analysis conducted by the Institute using the IMPLAN economic modeling tool.

In addition, since the GET is regressive, “A large portion of the tax burden would no doubt fall on middle-income families and those who are just above the poverty line,” he said.

Keli'i Akina, Grassroot Institute president and CEO, voiced concerns about the surcharge on KITV4 on Sunday.

“We have a doctor shortage already on Maui and we may see an increase in that because many doctors have left already, specifically because they are taxed with the GET tax for their services,” Akina told reporter Shanila Kabir.

In written comments, Dr. Zachary Thielen testified: “Most private practices on Maui are barely scraping by due to inflation, rising overhead costs and an inability to set our prices to keep up. If Bill 49 is passed, I believe that many local private practices will continue to close.”

Said Maui resident Debra Merle: “Food prices have soared this past year, as have the cost of rents. Have you considered what it will be like for tenants on Maui who already pay extremely high rents to have another 0.5% added to their GE tax?”

Maui resident Ben Wallin testified: A famous line from “Rap’s Hawaii”: "Don’t they know when you raise the prices, the cost go up?" I strongly oppose this huge 13% increase in our state’s all-encompassing compounding tax.”

If you would like to read all the written testimonies, go here. To see Akina’s interview on KITV4, go here.

The next Council meeting on the bill will be on Monday, June 26, starting at 6 p.m.