Source: © 2009 Ed. Gross/The Image Group LLC, Honolulu

BY JIM DOOLEY – Some vendors at the state’s Aloha Stadium swap meet have failed to pay or underpaid state taxes,

Source: © 2009 Ed. Gross/The Image Group LLC, Honolulu

Auditor Marion Higa said in a report that harshly criticizes state oversight of the commercial activity.

The audit, presented to the Hawaii State Legislature today, also questioned whether the swap meet complies with legal restrictions placed on the land when it passed from federal to state control.

The audit even said that the City’s plans for construction of a large rapid transit station at Aloha Stadium might be jeopardized by the unapproved presence of the swap meet on stadium grounds.

Aloha Stadium officials disputed those assertions and defended oversight of the swap meet by stadium manager Scott Chan and contractor CenterPlate.

Higa’s audit, begun in 2009, found discrepancies in the excise tax licenses of more than two dozen of the top vendors at the swap meet.

And when the Tax Department matched vendor tax return information with business income data they filed with the swap meet, significant discrepancies were found, according to the audit.

One third of the top 450 vendors hadn’t filed excise tax returns at all. Others had significantly under-reported their income and tax liabilities, Higa said.

“The Stadium Authority board and stadium manager do not adequately oversee the swap meet contractor, which in turn, does not consistently enforce swap meet rules and regulations,” said the audit.

Swap Meet Vendors (courtesy: Hawaii State Auditor)

“As a result, one-third of swap meet businesses underpay their taxes or do not pay taxes at all,” the audit found.

“The Aloha Stadium Swap Meet and Marketplace, considered by many to be Hawaii’s premier discount outlet and outdoor market, is the Stadium Authority’s largest revenue generator, earning approximately $6 million a year,” said the audit.

To protect the state and its property, the audit said, the Authority and its staff “need to take active roles in the management and oversight of the swap meet contractor and swap meet operations in general,” the audit concluded.

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Jim Dooley joined the Hawaii Reporter staff as an investigative reporter in October 2010. Before that, he has worked as a print and television reporter in Hawaii since 1973, beginning as a wire service reporter with United Press International. He joined Honolulu Advertiser in 1974, working as general assignment and City Hall reporter until 1978. In 1978, he moved to full-time investigative reporting in for The Advertiser; he joined KITV news in 1996 as investigative reporter. Jim returned to Advertiser 2001, working as investigative reporter and court reporter until 2010. Reach him at Jim@hawaiireporter.com