Tax revenues rebound to 2002 level

By Lynda Arakawa
Advertiser Capitol Bureau

State tax revenues for September jumped 10.3 percent, or $31 million, over the same month last year, the state Department of Taxation reported yesterday.

The boost helped offset July's large decline in revenues, bringing total tax collections for the first quarter of the fiscal year to 0.1 percent below the level at the same time last year.

"We rebounded kind of nicely in August and September," said Tax Director Kurt Kawafuchi, adding that the economy appears stronger, with increased payroll tax and general excise tax collections.

But Kawafuchi was cautious.

"It's definitely a positive trend — we like that — but it's premature to jump to the conclusion at this point that we're doing really well," he said. "We've had a couple of good months in August and September, but I'd like to see how we're doing in October and November, because those are low months for tourism."

The state Council on Revenues, whose revenue forecasts are used to help craft the state budget, projected the state general fund tax revenues would grow by 6.2 percent this fiscal year. Each percentage point is equivalent to about $30 million.

General excise and use taxes in September increased by nearly $18 million — or 10.8 percent — over the previous September, largely because of an additional working day last month.

That brought cumulative general excise tax collections for the first quarter to the same level of collections for the period last year. General excise taxes are considered the state's major economic indicator and make up about half of the general fund.

Individual income taxes also increased by 5 percent, or 5.3 million, over September 2002.

Corporate income taxes collected last month came to $9.8 million, more than double what was collected September last year, mainly because of a drop in corporate income tax refunds, the department said.

Kawafuchi said he had not yet reviewed those numbers but said factors that might explain the collection increase may include the state's scrutiny of high-technology investment tax credit claims.

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