Battle of Ideas: Creating New Sales Tax Mechanism for Counties a ‘Naked Tax Increase’

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”’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. Sen. Sam Slom, R-Hawaii Kai, is the only Republican on the Senate tourism committee, which debated the issue yesterday, and spoke out against the measure on the floor of the Senate on behalf of himself and his four Senate Republican colleagues.”’

“Sam Slom Image”

Senator Slom rose in opposition to the measure and stated:

Mr. President, I rise in strong opposition to this bill.

Some people have incorrectly classified this bill as a home rule bill, but in fact, it is not a home rule bill.

What it is it’s a tax bill, an additional $120 million potentially, or more, on the taxpayers, primarily the city and county of Honolulu.

It started out to give an option to the counties.

It was narrowed down to the county with more than 200,000 population, and then it was set to set the rate at 1 percent, then it set the dates, then it takes away and changes the formula for the transient accommodations tax for the neighbor islands.

And there is some residue from that TAT under this proposal and that surplus amount would go back to the state.

So, one could argue, I think, very accurately that this is a backdoor tax increase for this state as well.

But here we would be imposing a retail sales tax on top of the general excise tax, on top of the general excise tax which you intend to try to increase in a few minutes.

And all these crocodile tears earlier about our consumers and about the families and about how much money we’re going to save, we’re not going to save anything if we’re continually increasing taxes.

So if we want home rule, then let’s in fact truly have home rule and let each of the counties decide what they want to do in terms of their taxes and also in terms of providing services and all of that.

Then we’ll have home rule, and we’ll have autonomy, and accountability, but we’re not doing that in this bill.

This is, again, a naked tax increase.

”’Sam Slom is the Republican Senator representing the Hawaii Kai area of Oahu.”’