Support low for excise-tax hike

By Lynda Arakawa
Advertiser Capitol Bureau

The Senate leadership's proposal to increase the state general excise tax and inject more money into public education has gotten, at best, a lukewarm reception.

Bill hearing today at 9 a.m. A bill to increase the state general excise tax and provide a $100 per person food tax credit will be heard at 9 a.m. today by the Senate Ways and Means Committee in Conference Room 211.

Ways and Means Committee Chairman Brian Taniguchi, D-10th (Manoa, McCully), yesterday said this year might present the best chances for a tax increase, citing looming financial matters such as the possibility of war and lower tax revenue projections. Taniguchi also said the idea was bolstered by a recent Advertiser public opinion poll that showed most Hawai'i residents support raising taxes to improve public education.

But lawmakers are generally leery of raising taxes, and at least some in the House are hesitant.

"A tax increase proposal comes up every year and in past years the House has not supported a tax increase," said House Majority Leader Scott Saiki, D-22nd (McCully, Pawa'a). "But if the Senate passes one over we'll consider it."

House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), said: "I don't think it's warranted at this point in time."

Taniguchi said the general excise tax increase is expected to boost revenues by about $180 million, which would be offset by an estimated $100 million in food-tax credits.

He said the remaining $80 million would go in a special fund earmarked for education, probably with $70 million going toward lower education and $10 million to the University of Hawai'i.

Taniguchi, who has unsuccessfully floated tax-hike proposals in the past, said the leadership wanted an option to prepare for severe budget problems in the event of a war and if the Council on Revenues lowers its state revenue projection — which lawmakers base the state budget on.

What also helped the effort, he said, was The Advertiser poll, which was conducted in January and showed that 77 percent of 603 residents said they would pay more taxes to improve the quality of public education.

But even if the proposal passes both the House and Senate, there remains the strong possibility that Gov. Linda Lingle, who has pledged not to raise any taxes, would veto it.

Lingle's state budget director, Georgina Kawamura, spelled out various oppositions to the bill in addition to the tax increase, such as creating a special fund without showing the direct connection between the revenue source and those who would benefit.

"There's always the option of reducing government expenses to actually come in line with government revenue," she said.

Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Portlock), called the proposal a threat that attempts to scare up support for tapping the $175 million Hurricane Relief Fund when the state should rein in spending.

"The problem isn't that our citizens aren't paying enough; it's the state is spending too much," he said.

Senate Majority Leader Colleen Hanabusa, D-21st (Nanakuli, Makaha), said she's not sure how far the proposal will advance, saying "it depends on how bad the economy gets."

"I think if there is a war, for example, and given the fact that the collections were down in the month of January and the Council on Revenues will be meeting next month, we may not have a choice," she said. "It may be a situation of — we are already, I believe, cut to the bone and I don't think anyone's said anything to the contrary."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 525-8070.