COMMENTARY
Let's give tax relief for those most in need

By Rep. Lynn Finnegan

Before the Legislature can think of other ways to spend taxpayers' money, let's increase our chances of survival on this island, marked by dizzying real estate costs and increasing gas prices, by giving money back to the people.

Taxes imposed by the state should be given back to taxpayers, particularly in times of large budgetary surpluses. Now is the time for that tax relief, when the state's pockets are filled with money that came from us.

The Hawai'i Government Employees Association got its pay raises: Gov. Lingle approved pay raises averaging 5 percent each year over the next two years. Teachers will get their pay hike: averaging 9.56 percent. And the United Public Workers will also get theirs: pay raises averaging 5 percent over each of the next two years.

Now it is time for the rest of us. Where is the share for those not backed by government unions, but who work just as hard?

The pay raises for the HGEA, HSTA and UPW will cost the state $240.9 million over the next two years. With a strong economy producing more revenue than ever, the state's general fund will have roughly $820 million more by the end of fiscal year 2007. This leaves lots of room for tax relief.

Let's give the money back to the people who need it most. Let's increase the standard deduction so working people can bring home a larger paycheck. And let's get rid of the GET on food bought at the grocery store. These two tax deductions would cost the state $251 million — a fraction of the new $820 million surplus.

Back in May, Republicans proposed a legislative amendment to give lower-income workers a larger standard deduction. We would have lowered the taxes of the 334,000 most needy taxpayers and even taken 27,000 off the state's tax rolls entirely. We would have done so by increasing the standard deduction from $1,900 to $5,000 over the next three years. Increasing the standard deduction to $5,000 would mean that someone who makes $24,000 annually would only pay income tax on the first $19,000. These savings would significantly help families who struggle the most.

In January, the House speaker and the Senate president both said that they agreed with the governor that Hawai'i's people deserved meaningful tax breaks. But at the end of the session, none were provided. Lawmakers now have a chance to make it right by providing tax relief for the neediest, should they call a special session.

In addition to increasing the standard deduction, we should eliminate taxes on groceries. Everyone would benefit from this tax break, from the wholesaler who buys food from the farmer, to the grocer who buys food from the wholesaler, to the consumer — the rest of us.

As consumers, we would see no taxes on groceries — that 4.167 percent at the end of every supermarket receipt. This equals instant savings. No more tax passed on from farmer to wholesaler, and wholesaler to grocer. Much of the savings would go to consumers as lower prices for groceries.

While all of us would benefit from ending the GET on food, those among us with the least would benefit the most. That's because the lower our income, the larger the share of our income is spent on food bought in stores.

Fellow legislators, let's give the people a break before another year goes by. With a big, new surplus, this is the perfect time to give something back to those who most need help.

Rep. Lynn Finnegan is the minority leader of the state House of Representatives. She wrote this commentary for The Advertiser.