Income Tax Break May be Overshadowed by New Rail Tax

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“Sam Slom Image”

Income tax reductions for the middle class may be overshadowed by a possible tax increase to pay for Oahu’s fixed rail mass transit and other tax proposals this legislative session which began Jan. 19.


The income tax break was proposed by the Senate Majority in addition to “solutions” to Oahu’s traffic woes and plans for affordable housing on the opening day of the 23rd Legislative Session.

Gov. Linda Lingle delivered her “State of the State” address on Jan. 24 and outlined her plans for lowering the cost of living, cutting taxes, creating more affordable housing, expanding early childhood education, supporting charter schools, promoting economic development and supporting Hawaii’s business community. She proposes lowering the unemployment insurance tax wage base which could save businesses $196 million.

While that all sounds fine, the proposals by the majority party could create more economic hardship for business and taxpayers. Both the House and Senate majority plan to introduce measures that may increase taxes in order to pay for a mass transit system for the island of Oahu.

The Senate proposal may come in the form of a general excise tax increase or the creation of a transit authority with taxing powers. The House wants to authorize the counties to levy a sales tax to pay for mass transit. There are alternatives to costly mass transit.

Our minority caucus package continues to pursue the following issues: Education: State Teacher Reciprocity, Teacher Recruitment and Retention, continued support for Charter Schools and the Creation of Local School Boards through a constitutional amendment as part of my own bill package.

The Senate minority caucus will also continue to pursue the repeal of the gas cap law, the repeal of the gasoline divorcement law, distribution of traffic fines to the counties, exemption of food and medical services from the general excise tax, prohibiting raids on the State Highways special fund, the DCCA’s Compliance Resolution Fund, the ERS, the Rainy Day fund and the Hawaii Hurricane Fund. We also have a bill to conform the state personal exemption rate to that of the federal government.

I’ve introduced several bills this session listed on the page attached to this report. If you are interested in having any bills heard please call the respective committee chairs and urge them to put those bills on the calendar. The deadline for “first lateral” bills is Friday, Feb. 18.

”’For more information, call Sen. Sam Slom, R-Hawaii Kai, at 586-8424.”’

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