Wednesday, January 10, 2001
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Posted on: Wednesday, January 10, 2001

Governor's tax cut plan raises some eyebrows

By Kevin Dayton
Advertiser Capitol Bureau Chief

Gov. Ben Cayetano’s proposal to again cut state income taxes is drawing a skeptical response from some quarters.

Last month, Cayetano said he would propose a new income tax cut this year that would lower the top tax rate by one percentage point over two years, and would make similar adjustments to benefit taxpayers with lower incomes.

That would drop the top state income tax rate to 7.25 percent and would cost the state about $145 million a year in lost revenue, according to one state tax researcher.

Cayetano’s proposal comes as the state continues to phase in an income tax cut approved by legislators in 1998. That cut also reduced the top tax rate, and is expected to cost $1.5 billion in lost tax collections from fiscal years 1999 to 2005.

Senate Ways and Means Committee Chairman Brian Taniguchi said Cayetano’s proposal was "a little surprising."

"I haven’t heard his rationale, so before I say no, I’m against it, I want to at least give him an opportunity to give us an explanation," said Taniguchi (D-McCully, Moiliili, Manoa).

Taniguchi noted that the governor is proposing increases in spending for education and social programs to compensate for previous budget cuts, and is negotiating with public employee unions that want raises.

Cayetano declined to elaborate on his proposal yesterday. The subject may be an element of Cayetano’s State of the State address to the Legislature on Jan. 22.

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