Senators seek input on sales-tax proposal
By Lynda Arakawa
Advertiser Capitol Bureau
Senators are revisiting the idea of allowing counties to levy a sales tax in exchange for giving up their share of hotel room tax revenues.
The Senate Tourism Committee will hold an informational meeting today to discuss taxing provisions for the counties. The jumping-off point for discussion will be the Senate's failed proposal from last session, which would have allowed the counties to levy a 1 percent retail sales tax in exchange for no longer taking a share of hotel tax revenues.
Officials have estimated a 1 percent sales tax would amount to about $120 million for Honolulu. The city's budget for this year anticipates hotel tax revenues of $37.3 million.
Committee Chairwoman Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Hts.), said Senate leadership wanted to get the counties' input on the issue to prepare for the legislative session that begins in January.
"It's certainly an option that the counties have been wanting and we want to see what the discussion will bring about, if in fact there is consensus for it," said Kim, a former Honolulu city councilwoman.
"It's obvious that the counties would like to have taxing authority and be able to make their own decisions on monetary issues other than property taxes."
The measure, House Bill 1554, passed the Senate last session but stalled after the House refused to discuss the issue further in conference committee. The House's version of the bill would have allowed Honolulu county to charge a 0.5 percent excise tax if it gave up its share of hotel room tax revenues.
House and Senate Republicans have said the measure would result in a tax increase. Democrats who support the idea said it would bring home-rule to the counties.
Gov. Linda Lingle, a former Maui mayor, has said she supports giving taxing authority to the counties because of the home-rule issue but didn't offer support for the Senate's last version of the bill, which set the amount of the tax and a deadline to enact it.
That version of the bill also required the city to give up its full share of the hotel tax in exchange for a sales tax while the other counties would only give up half their portion if they levied the tax.
Honolulu Managing Director Ben Lee has said the city would push to charge a sales tax if the state gave it the authority to do so, and City Council Budget Chairwoman Ann Kobayashi was also supportive of the idea.
Big Island Mayor Harry Kim has said his county wants taxing authority, but not at the expense of taking away hotel tax revenues.
Kaua'i Mayor Bryan Baptiste is reserving judgment until today's discussion, but it was interested in having some kind of taxing authority, said Liana Soong, administrative specialist to the mayor.
Maui Mayor Alan Arakawa objected to the measure, said his information officer, Ellen Pelissero.
The meeting will be at 1:30 p.m. today in Capitol room 212.
