Battle of Ideas: Counties Should Have New Taxing Powers

article top

”’Editor’s Note: The House and Senate debated in the 2003 Legislative session whether they should allow and enable Hawaii’s counties to impose a new sales tax on its residents and visitors, and in return, take more of the Transient Accommodation Tax or TAT for the state general fund. The debate was resurrected yesterday at a special hearing called by the vice president of the Senate and tourism committee chair, Donna Kim, D-Kalihi.”’

”’During the 2003 Legislative Session, Republican Gov. Linda Lingle maintained she is in favor of home rule and giving counties more independence, and so would sign the bill to give the option to impose a new sales tax.”’


”’The five Republicans of 25 legislators in the Senate, including Sens. Gordon Trimble, Bob Hogue, Fred Hemmings, Paul Whalen and Sam Slom, were united against the establishment of a new tax.”’

”’Republicans in the House were divided on the issue. Voting against the tax were 11 of 15 Republican Reps. including Corrine Ching, Lynn Finnegan, Galen Fox, Bertha Leong, Barbara Marumoto, Colleen Meyer, Mark Moses, Guy Ontai, David Pendleton, Bud Stonebraker and Cynthia Thielen. Those in favor according to the state web site were Republican Reps. Brian Blundell, Kika Bukoski, Mark Jernigan, while Chris Halford was absent.”’

”’All Democrats in the state Legislature, with one exception, voted to pass the tax bill. The only Democrat to vote no was Sen. Melodie Aduja, D-Kahaluu.”’

”’The bill was killed in conference committee when the House and Senate conferees could not agree on a final reading. But the bill is still alive through the next Legislative session as the Hawaii state Legislature operates in a two-year cycle.”’

”’Yesterday’s hearing was intended to let the counties come forward and plead their case — for or against the tax change. And to lay the groundwork for the Democrats to move forward on the imposition of a new tax and redirection of the TAT to their general fund budget.”’

”’Here is one point of view on the issue. House Finance Chair Dwight Takamine, D-Big Island, spoke in favor of the tax increase inserting these comments into the House Journal.”’

“Dwight Takamine Image”

House Bill 1554, House Draft 1, proposes to authorize the city and county of Honolulu to levy a county general excise tax and redistribute Honolulu’s share of the Transient Accommodation Tax (TAT) to the remaining counties. (Editor’s note: This changed in the Senate version to be all counties could have taxing power with money going to the state general fund.)

Let me reiterate that this only authorizes this action. The bill does not mandate it. If the City & County so desires, it may raise a county GET. Then and only then will the TAT distribution be altered.

This is the case of home rule, Mr. Speaker. We are giving the City & County of Honolulu the option and flexibility to address its own fiscal concerns. In effect, it allows for a greater latitude in self-determination.

But this measure not only provides greater flexibility for Honolulu. The possible benefits of this bill extend to all counties. Due to the fact that they do not have a large population base from which to draw taxes, the neighbor island counties rely heavily on revenues from the TAT. Providing counties with a larger share of TAT revenues would allow them to more squarely address their own revenue problems. In fact, when this bill was heard before your finance committee, all counties submitted testimony in strong support.

It is appropriate that if the City & County of Honolulu is granted a revenue-enhancing ability, that it be one that is exportable. The GET is not only paid by Hawaii residents, but by visitors as well. In essence, tourists would be helping to fun the infrastructure which they are using while vacationing here in Hawaii.

On a final note, let me point out that we would not be setting a precedent in granting this authority. You may recall that he ability to establish a county GET was granted 13 years ago in order to provide the counties with a mechanism to fund a system of rapid transit. As you know, that authority was never used, but it was there as an option, just as this would be.

”’Dwight Takamine is the Democrat Representative for the Big Island.”’