Lawmakers want to pile new and additional taxes on to everything from car registrations, rental cars to alcohol, sugary drinks and Internet purchases.
The new pension tax was crippled in the Senate, but the House is still pushing the proposal.
And some lawmakers warn that although the 1 percent hike to the state’s General Excise tax might appear dead, no tax proposal really is gone until the session concludes on May 5 at midnight.
Several tax exemptions on businesses that already pay the state’s General Excise Tax, and would be double or tripled taxed without the exemption, are likely to be repealed. That also goes for General Tax exemptions for large Hawaii companies including Hawaiian Airlines, which said it needs the exemption to compete on a global scale against other airlines that don’t pay the tax but fly the same routes.
The tax and fee hikes and exemption removals are being proposed to cover a $1.3 billion shortfall for a $22 billion biennium budget, which still does not have any significant cuts or spending reductions. All reductions moving forward are due to the increases in spending that newly elected Gov. Neil Abercrombie proposed.
And although lawmakers in the House and Senate, including Reps. Kymberly Pine and George Fontaine and Sens. Malama Soloman and Sam Slom pushed for legislation that would help to improve the business climate and stimulate the economy, no significant legislation that would help business has momentum. In fact, several bills that will hurt business, including a minimum wage hike, are pending.
One tax that will likely pass is the Internet purchase sales tax. Right now there are two federal legal rulings opposing attempts to tax businesses that don’t have a physical presence in the state (see comment section below for more details). That is under the theory that the businesses don’t have to pay taxes for government infrastructure improvements and services that they will never use.
While some retailers want the Internet tax so people will be encouraged to buy local, Amazon is the main Internet business fighting the proposal in Hawaii and nationwide.
Pushing the plan in the Senate is Sens. Suzanne Chun Oakland and Carol Fukunaga and Rep. Isaac Choy in the House.
Waiting patiently on the sidelines are gambling advocates who want gambling legalized in Hawaii. Hawaii is one of two states with no forms of legalized gambling allowed. They say an estimated $1 billion worth of gambling money is leaving the state every year for Las Vegas and other gambling friendly destinations.
Proponents have suggested everything from poker tournaments, to legalized bingo on Hawaiian homelands, to a single hotel in Waikiki that houses a gambling operation.
The plan with the most momentum right now is for a single hotel in Waikiki to obtain a 10-year state license at $10 million a year for $100 million. Advocates said the state will also benefit from between $80 million and $100 million a year in General Excise Taxes as the hotel would pay 15 percent GET instead of 4 and a half percent.
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Pushing for tax hikes and legalized gambling as a means to boost state revenue are many social service providers who don’t want to see their budgets cut. They walk the halls of the capitol daily meeting with lawmakers to strengthen their relationships and their positions.
The cost for social service programs and services through the Department of Human Services will soon overtake the cost of public education. Today, Department of Education consumes $2.8 billion a year, while the Department of Human Services is at an estimated $2.3 billion per year.
Meanwhile, the public is not represented on a daily basis at the capitol, however, more than a 1,000 people wrote in to oppose the plan to raise the General Excise tax. In addition, protests are planned in every county this Friday, April 15, by the various Tea Parties and other tax hikes opponents.