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Sunday, March 1, 2015
GE Tax: Piling On!
By Tom Yamachika @ 4:01 AM :: 5015 Views :: Taxes

Piling On!

by Tom Yamachika, President, Tax Foundation Hawaii

Last week we mentioned that our Legislature was considering several bills that would add increases or surcharges to the Hawaii General Excise Tax (GET). This week we will talk about what those bills actually do, and provide bill numbers so those of you who are so inclined can track their progress. In no special order, here they are!

Agriculture: HB 330 would increase the GET by one full percentage point, but “only” for a two-year period, to provide a dedicated funding source for the acquisition of agricultural lands. The idea is to buy up agricultural lands to make sure they remain in agriculture. The bill would set up a new trust fund that is supposed to be used only for that purpose. The House bill died in committee, and there is no Senate version.

Elder Care: SB 727 and HB 1253 would add a long-term care surcharge of 0.5% onto our GET. (For those in Honolulu, it would add a second surcharge; those on other islands would get to experience it for the first time!) The surcharge would be used as a dedicated source of funding for a defined benefit plan that would pay $70 a day for up to a year for any 10-year residents needing long-term care. The amount of the benefit may be adjusted from time to time by the trustees of the plan, and the plan would pay out regardless of the income level of the recipient. The Senate moved its version of the bill, while the House version died in committee.

Rail for Honolulu: SB 19, HB 19, and HB 134 would make the existing Honolulu county surcharge on the GET permanent. HB 337 would extend it until an unspecified (blank) date. The Senate held hearings on SB 19 and, after listening to tales of woe and an impassioned plea from Mayor Kirk Caldwell and HART’s executive director Dan Grabauskas, advanced the bill but watered it down slightly to a 25-year extension of the surcharge instead of a permanent one. HB 337 was not heard by its first House committee and is headed to the cutting room floor. The other House bills were referred only to one committee, and are still alive.

And Let’s Not Forget the Other Counties: HB 320 and SB 426, a bill submitted by the Hawaii Council of Mayors, would allow other counties to enact a surcharge on the GET, up to 1%, which they could use without restriction. The House bill was referred to only one committee. SB 426 was referred to three committees and died. SB 616 would accomplish the same thing except that 25% of the money would go to the state general fund. That bill wasn’t heard either, and also died.

Oh, and There’s DOE Too: HB 1240 would allow Honolulu to extend the rail surcharge at a 0.25% rate and would allow other counties to adopt a similar surcharge, and in addition would increase the GET rate to 4.25% with the 0.25% to fund the Department of Education. The bill was re-referred to only one committee.

Poverty Relief: SB 902 proposed to increase the standard deduction, renter credit, and food/excise credit now provided in our income tax law to benefit lower income folks. The bill proposed to pay for the changes by increasing the wholesale GET rate from 0.5% to 1.0%. The Senate heard the bill but then shelved it. There is no House version.

As can be seen, there are a number of bills in the legislative heap that would pile on to the GET. Which will make it to the end of the process? In part that may depend on how the public reacts to these measures. If you have a reaction and want to make it known to your lawmakers, now is a great time to do it!

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