Posted on: Saturday, February 26, 2005

Rail debate focuses on taxes

By Mike Leidemann
Advertiser Transportation Writer

Alternates such as gasoline taxes, tourist taxes, property taxes and a rollback of state tax breaks all should be considered before the Legislature authorizes raising the general excise tax to pay for county improvements in transportation, state lawmakers said yesterday.

"It's not a question of whether we need rail or not. The question is trying to identify the best way to pay for it," said Rep. Mark Moses, R-40th (Makakilo, Kapolei, Royal Kunia). "Right now, we're suckering people into believing that the excise tax is the only way."

House Finance Committee members heard testimony yesterday on House Bill 1309, which would give counties the authority to increase the excise tax from 4 percent to 5 percent.

The bill and a similar one in the Senate are the primary measures still alive at the Legislature this year to help finance transportation projects, including a proposed rail rapid-transit line for O'ahu.

Moses and others suggested looking at other taxes available to the counties, including property, gasoline and hotel-room taxes. Rep. Colleen Meyer,

R-47th (Ha'iku, Kahalu'u, La'ie), suggested that the city start a sales tax. Rep. Glenn Wakai, D-31st (Salt Lake, Tripler), wondered why the state doesn't eliminate hundreds of millions of dollars in tax credits and use the money for transportation instead.

Lowell Kalapa, head of the Tax Foundation of Hawai'i, said: "The excise tax is the worst to increase because of its pyramiding structure."

Members of a governor's task force on transportation concluded last year, however, that the excise tax is the only vehicle in Hawai'i that could generate enough money to cover the estimated $300 million per year needed to build a rail line on O'ahu.

"The group found that the excise tax was the best way to raise the funds," said City Councilman Nestor Garcia, who was on the task force along with Moses.

Pat Lee, a Kane'ohe resident, said he supports the excise tax increase, even though he won't benefit directly from a transit system proposed for Leeward or Central O'ahu. "I'd be willing to pay more taxes if it let me and others squander less time in traffic and spend more time on the job or with my family," he said.

While debate yesterday focused on taxes, several people offered support or criticism for the transportation plans in general, suggesting that any rail system developed in Honolulu also include upgrade plans for buses, bicycles and pedestrians.

"Transportation and land use are intertwined," said Henry Curtis, executive director of the environmental group Life of the Land. "We need a holistic solution — not a piecemeal solution with all kinds of unintended side effects."

Wes Frysztacki, vice president of the private Committee for Balanced Transportation, said the bill would allow improvements in all forms of transportation in all the counties. "This bill is for all modes of transportation, for people," he said.

Reach Mike Leidemann at 525-5460 or mleidemann@honoluluadvertiser.com.