The Hawaii County Council Finance Committee is the next venue for a proposal by state mayors to allow them flexibility to add a 1 percent surcharge to the general excise tax.
South Kona/Ka‘u Councilwoman Brenda Ford has added a discussion of the proposal to the committee’s agenda for an 11 a.m. Tuesday meeting at the West Hawaii Civic Center.
“I have no agenda pro or con. I have no position on this,” Ford said Thursday. “I have tons of questions and very little information. Taxes are a big issue and I want the Finance Committee to be as informed as possible at this point in time.”
The public can address the council on the issue at that location or by video conference from Hilo council chambers, the Kohala county facility, Hawaiian Ocean View Estates Community Center, Pahoa neighborhood facility or the Waimea council office.
The state GET is currently at 4 percent. Honolulu already has a half-cent GET surcharge it’s using to help pay for rail transit. Unlike a sales tax, the GET is applied against all steps of a manufacturing process, leading to costs passed on to consumers beyond the 4 percent at the register. About one-third of it is paid by visitors, Mayor Billy Kenoi said.
The Hawaii Council of Mayors requested bills, SB2115 and HB1606, to allow them the extra penny on the dollar, a 25 percent increase in the tax. The mayors claim they currently don’t intend to raise the tax; they just want the option in case they need to.
The mayors prefer a stable revenue source that doesn’t require them to continue trying to prevail on the Legislature to give up more of the transient accommodations tax. The Legislature capped the counties’ share several years ago, leaving them scrambling to make up the loss.
The executive board of the Hawaii State Association of Counties approved the inclusion in the county package Wednesday. Unlike the rest of the HSAC package, the measure wasn’t discussed and endorsed by the state’s four county councils, but was a last-minute inclusion in the package.
The mayors’ proposal received a tepid response Wednesday at a joint Senate Ways and Means and House Finance Committee meeting. Several committee members said the GET is the state’s purview, not the counties’. If the county has a 1 percent option, it will reduce the state’s ability to raise taxes if needed, they said.
Counties have the option of raising property taxes, said House Finance Committee Chairwoman Sylvia Luke, a Democrat representing parts of Honolulu.
Hilo Councilman Dennis Onishi, HSAC vice president, said he met Thursday with House Speaker Joe Souki, D-Maui, about Souki’s request that the Legislature consider removing the cap it placed on the TAT some years ago.
HSAC member counties originally included bills granting the counties more of the TAT, but they were struck from the package before it was approved.
Onishi said removing the TAT cap would make it less likely the counties would need the GET. But he said he supported the Legislature giving counties the option to raise the excise tax.
“It gives us more cards to play with,” Onishi said. “It’s up to the council whether to increase it or nor increase it.”
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