honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, March 27, 2008

State should not keep transit tax 'windfall'

StoryChat: Comment on this story

Nobody likes paying extra taxes, but once people agree to do so, they want at least that their money ends up where it's supposed to go.

That's why the state needs to take a hard look at how it's handling the collection of the transit tax for the City and County of Honolulu, which in 2006 decided to tack on a half-percent surcharge to help finance its planned mass-transit project.

State legislators passed a law that gave the county that authority. It also allowed the state tax collectors to keep 10 percent of the money to cover the cost of funneling the money into the transit fund.

But it's not going to cost the state nearly as much money as officials first guessed. There's going to be $40 million left over from that 10 percent cut. Not exactly chump change.

That excess money should be returned to the City and County of Honolulu, to be spent on the original and stated purpose for the tax: Honolulu's much-needed transit project.

This may not sit too well with lawmakers: The state has the authority to keep the excess, under the 2005 law that enabled the tax. And any extra cash these days is like meat thrown to hungry hounds.

GOP Sen. Sam Slom proposes a taxpayer rebate, but that would incur administrative costs of its own.

At this stage in the planning for the 'Ewa-Honolulu transit project, it's obvious that the 10 percent cut in the original legislation is a sky-high estimate.

Prudent, sensible government practices demand that the administration refigure the amount it needs for tax collection and pass a law to take only what it needs.

The issue of the tax collection — the extra half-percent tacked on the general excise tax paid on O'ahu — has been a sore point for city and state leaders from the get-go. The state and city administration eventually agreed to have the state tax agency divert the half-percent into the transit fund, minus the 10 percent to administer the tax.

That's still the most cost-effective way to collect the money, and those costs are expected to decline from the $6 million the first year to under $1 million now.

Lawmakers should see that the Department of Taxation pares the amount it takes to more realistic levels, and leave as much money as possible for its intended purpose, the one voters are paying for: developing an O'ahu transportation alternative. Honolulu, facing its biggest public-works challenge ever, should get the full share of the money.

• • •

StoryChat

From the editor: StoryChat was designed to promote and encourage healthy comment and debate. We encourage you to respect the views of others and refrain from personal attacks or using obscenities.

By clicking on "Post Comment" you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator.