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The Honolulu Advertiser
Posted on: Sunday, February 13, 2005

State must pursue unpaid back taxes

Most of us pay our taxes dutifully and on time each year. But thousands of individuals and businesses in Hawai'i are cheating the state and the rest of us.

This is not a new story.

Back in 1993, Advertiser reporter Jim Dooley first revealed a sorry mess in state tax collections. Using a computer to delve into the state's admittedly incomplete tax-delinquency records, Dooley found millions in unpaid taxes, penalties and delinquencies.

Two years later, the tax department under the new Cayetano administration announced a crackdown on tax cheats on three fronts: businesses, landlords and state workers. The state tax director at the time figured the potential net take for the state was $2 million or more.

Now Kurt Kawafuchi, tax director in the Lingle administration, says the amount of uncollected back taxes is $341 million. That's real money.

Some have suggested collecting the back taxes before considering raising the excise tax to pay for a rail transit system, which is not an accurate comparison. The transit tax hike, a suggested 1 percentage point excise tax increase, would raise roughly $300 million — each year.

The $341 million in delinquent taxes — provided we're able to collect it — is a one-shot deal.

Which is also a reason to think twice about Kawafuchi's request to hire 17 additional tax collectors. Once the back taxes are in hand, that will mean extra employees who will remain on the payroll once the job is done.

But Kawafuchi points out that his current staff is stretched thin, and that tax delinquencies are indeed a permanent issue.

Still, it seems an ideal opportunity to explore other options, such as "privatizing" the task, using contract workers until the job is done. Or temporary hires may prove to be the most cost effective.

Whatever the method, it must be done.

Honest taxpayers need to be assured that tax scofflaws will be held accountable, and that they won't be asked to pay more to compensate for the actions of others.

And thus far, the signs are encouraging and seem to point to a new era of vigilant enforcement at the tax department.