Hawaii’s county mayors are asking lawmakers to allow them to increase the state’s General Excise Tax by as much as 1 percent.
They lobbied Wednesday, Jan. 15, for their tax hike privilege at the opening day of the legislative session.
The state government controls the GE tax, which is 4 percent on all islands except Oahu where it is 4.5 percent.
Hawaii’s tax structure is unique in that there is no sales tax like in other states.
The GE tax is considered more progressive because it is charged at each level of transaction on goods and services, meaning the total amount of taxes are hidden.
Unlike many other states, food and medicine is also taxed.
Hawaii has among the most substantial tax burdens in the nation, and the overall highest cost of living.
Hawaii county mayors already control property taxes, and receive a portion of the state’s Transient Accommodation Taxes derived from taxes on hotel rooms.
House Speaker Joe Souki, who is from Maui, proposed in his opening day remarks to remove the cap on the amount of revenue that Hawaii’s four counties obtain from the state’s hotel room taxes.
Should the mayors get their way this session, Hawaii residents could see their taxes increase again.
House Speaker Joe Souki proposed his own tax hike during his opening day remarks at the legislature Wednesday.
Souki wants to tax the pensions of Hawaii’s wealthy, retired population.
Rep. Gene Ward, who is Vice Chair for the House Committee on Economic Development and Business, said he strongly opposes Souki’s new tax plan calling it unfair and a bad idea.
Ward said people work their entire lives to build a retirement, and increasing taxes for retirees sends the wrong message to youth and discourages the kind of activity that leads to economic prosperity.
Souki also proposed a tax decrease in 2016 in personal income taxes by allowing a tax increase to expire in 2015. The tax hike was passed during what lawmakers called a budget crisis.
The proposal to hike the state’s minimum wage from $7.25 an hour to more than 10 dollars an hour received a boost yesterday when Senate President Donna Mercado Kim said in her opening day remarks she supports a wage increase.
Senate Judiciary and Labor Chair Clayton Hee initiated the proposal.
Small businesses have fought the plan to hike the minimum wage, because they said they will have to slow hiring or lay off workers.
Senate Minority Leader Sam Slom, who opposes the wage hike, pointed out the increase in minimum wage increases several other costs for small businesses including unemployment compensation, TDI and Social Security.