honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Tuesday, April 15, 2008

Senate signs off on $1 tax rebate

 •  Legislature 2008
Read up on the latest happenings in the Legislature, find out how to contact your lawmakers, and explore other resources.

By Mark Niesse
Associated Press

Hawai'i residents will likely get a $1 tax rebate next year.

Senators yesterday voted to give final approval to the refund, which is required by the Hawai'i Constitution when the state has two straight years of a budget surplus. The measure now goes to Gov. Linda Lingle.

"Giving $1 to our residents is like going to a restaurant and showing your disdain for the lack of service and leaving a penny as a tip," said Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), one of three senators who voted no.

At least the state government won't use money mailing $1 rebate checks. The credit can be claimed when taxpayers fill out their 2008 tax forms.

Lawmakers said they wanted to keep the rebate small because tax revenues are falling short of projections and there are many demands on the state budget.

"This is the minimum amount we could provide," said Sen. Rosalyn Baker, D-5th (West and South Maui). "Our constituents were telling us, 'Spend the money on hospitals, schools and roads.' "

The rebate will cost about $1.3 million, with $1 going to each resident. The state's budget was set at $10.5 billion for two years last spring, but revenues are falling short of projections.

Tax relief is not a priority at the Capitol this year as lawmakers consider costly items, including renovations at the University of Hawai'i, public school upgrades, affordable housing and a potential purchase of the Turtle Bay resort.

Unlike the federal government's payments of up to $600 and $1,200 for individuals and couples, the state tax refund is not intended to help the economy, said Carl Bonham, a University of Hawai'i economist. The federal payments will begin being mailed early next month.

"This is purely about meeting the letter of the law," Bonham said. "I don't think you could find anybody in any office of state government who could claim this has anything to do with stimulating the economy. It's a drop in the bucket."

Last year, state lawmakers gave slightly more in tax refunds to meet their constitutional obligation at a cost of about $31 million, Baker said.

Taxpayers got refunds ranging from $25 to $160, if their income fell below $60,000. Those earning more than $60,000 didn't get any refund.

Many other tax breaks also failed to pass into law this year, including proposals to exempt the first $25,000 in income from taxes for people over 65 years old at a cost of $20 million per year and to add a $1,000 exemption for children in households with income of $100,000 or less at a cost of $34.9 million over two years.