Posted on: Friday, October 19, 2001

The September 11th attack
Legislators offer ideas to aid economy

By Kevin Dayton
Advertiser Capitol Bureau Chief

House and Senate Republicans offered their ideas for nursing the state economy back to health this week, including a capital gains tax cut and the GOP's familiar proposal to eliminate the excise tax on food.

It appears unlikely the proposals will receive much attention during the special session scheduled for next week. House and Senate Democrats are worried about the state's finances, and don't believe this is the right time for major tax cuts.

Senate Minority Leader Sam Slom pledged the Senate Republicans will work in a "non-partisan" manner to seek solutions to the state's economic problems, and said his colleagues support some of the proposals already floated by Gov. Ben Cayetano. But he said there are some "missing pieces" in what Cayetano has proposed.

"Primarily it is our position that we want to keep people working, we want to keep businesses in business, we want to increase cash flow and do more business," said Slom. R-8th (Wai'alae Iki, Hawai'i Kai).

Cayetano has said he also would like to reduce the state capital gains tax to try to encourage investment in Hawai'i, but has since dropped the proposal. Cayetano said the state cannot afford such a tax cut right now.

State tax collections are already expected to abruptly drop in the wake of the Sept. 11 terrorist attacks on the Mainland.

House Republicans have also proposed suspending the 4 percent excise tax on food for 13 weeks, and giving Cayetano the authority to extend that tax break for another 13 weeks if he chooses.

House Minority Leader Galen Fox, R-21st (Waikiki, Ala Wai), said the full six-month tax break would cost the state about $50 million in lost tax collections, but Republicans believe it would actually increase state tax collections in the long run by sparking economic growth.

Eliminating the excise tax on food has been proposed and debated at the Legislature for years, but the ruling Democrats contend it would drain so much money out of the state treasury that the state would have to cut public services.

The Senate GOP members also proposed giving schools the authority and money to award and manage repair and maintenance projects on their own campuses.