REPORT FROM THE HOUSE MINORITY CAUCUS – Today, House Republicans presented a letter to the Tax Review Commission opposing the commission’s proposal to increase the GET and other taxes. In the letter, Republicans argue that increasing taxes would hurt Hawaii’s most vulnerable citizens and negatively impact Hawaii’s economic recovery.
The letter reads as follows:
“Dear Chair Iwase and Members:
The House Minority Caucus would like to express its appreciation to The PFM Group for their work in developing their report titled Study of the Hawai‘i Tax System: Final Report, dated August 28, 2012. We would like to note that the report contains a number of recommendations we agree with and support including the elimination of the .5 percent GET and Use Tax rate on business-to-business transactions, the elimination of the individual income tax on the first $20,000 of adjusted gross income, the increase of refundable food/excise tax income tax credits, and improvements in tax administration. These recommendations would improve system efficiency and reduce taxes on low-income individuals.
Unfortunately, the report also contains a number of recommendations that we vehemently oppose. The most egregious of these recommendations are the increase of the GET rate from 4.0 percent to 4.5 percent (which is actually an increase to 5 percent for the majority of people of Hawai‘i), the implementation of income tax on pension income, the elimination of the income tax deduction for property taxes paid, and the increase of the corporate income tax rate. We find these recommendations, as well as others in the report, disappointing and disagreeable as they increase taxes on individuals and businesses placing a greater burden upon them.
This is especially problematic given the state of Hawai‘i’s economy and the significant cost of living faced by residents of the state. An increase in taxes would be a detriment to individuals and businesses at this most inopportune of times. Rather than exploring ways to increase revenue, we believe government spending should be curtailed and be done in a smarter and more efficient manner.
Furthermore, we feel the business climate should be improved in the state through improved regulatory procedures and greater government efficiency. A more business-friendly environment would help companies conduct business thereby growing the economy and helping the people of Hawai‘i.”