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Thursday, March 24, 2016
Lawsuit Dismissed: State’s 10% Rail Tax Skim Stands
By Tom Yamachika @ 5:17 PM :: 5161 Views :: Rail, Taxes

Lawsuit Challenging 10% Skimmed by State from Honolulu Rail Surcharge Dismissed; Foundation Vows to Continue Fight

News Release from Tax Foundation of Hawaii

HONOLULU, HAWAII–March 23, 2016–Today, Judge Edwin Nacino of the First Circuit Court dismissed the lawsuit by the Tax Foundation of Hawaii, a nonprofit taxpayer watchdog organization, that sought to halt the State’s practice of skimming tens of millions of dollars each year from the amounts collected for the Oahu rail surcharge.

Judge Nacino ruled that this case was a controversy with respect to taxes, so declaratory and injunctive relief was precluded by HRS § 632-1. He further held that the court rules (Rule 81.1, Hawaii Rules of Civil Procedure) denied to the circuit courts the power to give any relief against any State agency. He also said he thinks the statute allows the state to take 10% of the surcharge, regardless what it actually costs to assess, collect and dispose of the funds. In fact, the Department of Taxation has been covering almost its entire budget on the backs of those who pay the surcharge.

Today, the Tax Foundation of Hawaii reassured those concerned about the impropriety of the state’s diversion of monies—which now involves over $150 million sorely needed for rail construction— that the legal battle is not over. “Judge Nacino’s ruling doesn’t say that no problem exists, but just says that his court isn’t the one that can fix it,” said Tom Yamachika, President of the Tax Foundation of Hawaii. “We are currently considering our options with our legal counsel, but we want to let the taxpayers of the State of Hawaii know that our fight on their behalf will continue.”

Copies of the court documents are available on the Tax Foundation of Hawaii’s website,


About the Tax Foundation of Hawaii: The Tax Foundation of Hawaii, a private nonprofit, nonpartisan, educational organization has, for the past 60 years, encouraged efficiency and economy in government and has promoted an equitable tax system that encourages and maintains economic growth and stability in Hawaii. Read more about us at:  

AG News Release: Full Text State’s Motion to Dismiss

SA: Judge dismisses lawsuit over rail tax surcharge

HNN: Court dismisses challenge to state's ability to keep county tax surcharges for rail


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