House Passes Pension Tax Bill

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BY JIM DOOLEY – The state House of Representatives today passed bills to tax well-to-do pensioners, boost liquor and motor vehicle taxes, eliminate numerous existing tax exemptions, and impose 10 cent fees on plastic and paper shopping bags.

The measures will now be further considered by conference committees made up of state Senators and Representatives.


The pension tax bill was narrowly approved by the House after the Senate killed a similar version of the same measure in the morning.

Fifteen members of the House Democratic majority voted against the pension tax proposal as did all eight members of the Republican minority, but it wasn’t enough to carry th 51-member chamber.

Rep. Marcus Oshiro, chairman of the Finance Committee, told the lawmakers that the pension measure would only affect individuals with income of $100,000 and above and married couples with at least $200,00 in annual income.

The tax would be levied on 4,000 filers in Hawaii, “less than one per cent” of all taxpayers, Oshiro said.

It would raise some $17 million in new revenue for the cash-starved state, which faces a deficit estimated at $1.3 billion over the next two years.

“It’s a very modest amount but it does a lot of good,” said Oshiro.

The same bill also places a temporary $50,000 cap on the value of itemized deductions that individual taxpayers can claim on their state returns.

“50,000 is a lot of money,” Oshiro said, adding that the measure would affect less than four per cent of taxpayers but raise $22.4 million over the next two years.

Increases in state tax standard deductions and personal exemptions that were enacted two years ago would be “delayed” next year under the House tax bill, but then would be made permanent, said Oshiro.

Republican Rep. Barbara Marumoto said “senior citizens are very apprehensive” about the proposed pension tax.

“This bill will disrupt their financial planning and pull the rug out from under their lives,” she said.

House members also approved a variety of other measures that would estract new fees and expenses from Hawaii residents.

Among them was a 20 per cent hike in liquor taxes as well as boosts in the annual fees charged on motor vehicles.

Then the House passed bill to charge ten cents per plastic or paper bag given out by supermarkets and other retailers.

Retailers will be allowed to recover 20 per cent of the fee revenue for a year to offset the costs of collecting and remitting the fees to the state.

Plastic bags are outlawed on Kauai and Maui and retailers have argued that the new fees won’t cover the costs of paper bags now supplied to consumers who don’t use their own shopping bags.

House members also passed a bill eliminating valuable exemptions to the state’s general excise tax now made available to some businesses in Hawaii including airlines, subcontractors and sublessors.

Also passing was a bill to require out-of-state internet businesses to collect and remit “use” taxes on goods sold to Hawaii residents and to supply the names and addresses of their Hawaii customers to state tax collectors.

The House of Representatives also gave final approval to creation of a pilot medical marijuana dispensary on Maui; an overhaul of mortgage foreclosure procedures; and re-opening of the Kulani prison facility on the Big Island that was closed during the administration of Gov. Linda Lingle.







  1. “50,000 is a lot of money,” Oshiro said, adding that the measure would affect less than four per cent of taxpayers but raise $22.4 million over the next two years.

    If this were true, I wouldn’t have a problem, but the $50,000 cap is reserved for married people and surviving spouses. Single people get a $25,000 cap which is not a lot of money, particularly when you consider excess health expenses for seniors and the disabled. The 4% of people being affected probably include a lot of single people. This isn’t fair. Cap everybody the same amount.

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