Lingle proposes $346 million in tax relief | The Honolulu Advertiser

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Lingle proposes $346 million in tax relief | The Honolulu Advertiser | Hawaii's Newspaper

Updated at 4:20 p.m., Thursday, January 18, 2007

Lingle proposes $346 million in tax relief

Advertiser Staff

Gov. Linda Lingle said today she would ask the Legislature to approve $346 million in tax relief this session, including a $100 per person refund that would satisfy a constitutional requirement for tax relief this year.

At a news conference at the state Capitol, Lingle suggested a one-time refund along with six other permanent changes to the tax code.

The refund would be $100 per person for families with household income under $100,000 a year. A $25 per person refund would go to families earning more than $100,000 a year. The refund would cost the state $90.8 million.

Lingle would increase the standard income tax deduction to 75 percent of the federal standard. Lawmakers raised the standard deduction last session to 40 percent of the federal level.

The state would index the standard deduction, the personal exemption, and tax brackets each year to inflation.

The state would eliminate the general excise tax on 11 essential foods, including milk, eggs and fruit juice.

The state would add an additional $1,000 deduction per child for families earning under $100,000, and $500 per child for families earning over $100,000. The credit for dependent care would increase to $5,000 per dependent.

Lingle would restore a general excise tax exemption for fuel blended with ethanol that expired at the end of the year.

Lingle would exempt members of the National Guard and Reserves from state and county vehicle tax and registration fees.

"Our residents are struggling with the high cost of living, and they will continue to fall further behind unless we provide immediate and long-term tax relief," Lingle said in a statement.

State lawmakers are required by the constitution to provide a tax rebate this year because of two consecutive years in which the budget surplus exceeded state revenues by 5 percent.

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said House lawmakers were looking at tax relief in the $25 million to $50 million range.

Say said lawmakers would first have to consider spending on unmet needs, emergencies such as the cleanup after the Big Island earthquakes, and new contracts for public-employee unions, which could cost $500 million.

"My bottom line to the chair of Finance is this: can we afford it?" Say said.

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